As of August 26, 2025, the United States has officially moved ahead with plans to levy an additional 25 percent tariff on a wide range of Indian goods, raising the total duty to 50 percent on certain products. The move, effective August 27, is expected to have a sharp impact on India’s export-driven industries.
The US administration, acting under President Donald Trump’s Executive Order 14329, has justified the decision by citing national security and foreign policy concerns. Washington has pointed to India’s continued imports of discounted Russian crude oil, alleging that such purchases indirectly support Russia’s war effort in Ukraine.
Impact on Indian Exports and Economy
The new tariffs will particularly affect labor-intensive industries that form the backbone of India’s exports to the US. Textiles, gems and jewelry, shrimp, carpets, and furniture are among the hardest-hit sectors. Nearly two-thirds of India’s exports to the US, valued at more than 60 billion dollars, will now face higher duties.
Industry analysts warn of a steep decline in shipments, with some forecasts suggesting reductions of up to 70 percent in specific segments. This raises the risk of job losses and diminished competitiveness for Indian exporters, who may lose ground to rivals in Vietnam, China, and Mexico.
Not all sectors are targeted by the US decision. Pharmaceuticals, electronics, and certain petroleum products have been excluded, providing relief to India’s drug manufacturers, who remain key suppliers to the American healthcare market. Experts believe that despite the shock to exporters, the overall effect on India’s GDP could be limited, since domestic consumption remains the primary driver of economic growth.
India’s Response
New Delhi has strongly criticized the US action, calling the tariffs unfair and unreasonable. External Affairs Minister S. Jaishankar reiterated that India would not compromise on its national interests, particularly in matters of energy security and the livelihoods of farmers and producers.
Prime Minister Narendra Modi has pledged government support for affected small businesses and exporters, stressing the importance of the Aatmanirbhar Bharat, or self-reliant India, initiative. The government is said to be considering relief measures, including financial aid and efforts to help exporters tap alternative markets.
On the diplomatic front, India is seeking to ease tensions through dialogue, while reports suggest it has engaged a lobbying firm with ties to the Trump administration to negotiate a more favorable outcome.
The imposition of steep tariffs underscores a growing rift in US-India relations, with trade policy now intertwined with global energy dynamics and geopolitical strategy. For Indian exporters, the challenge lies not only in navigating higher barriers but also in adapting to an increasingly uncertain international trade environment.
Follow Us