New Delhi: The trade fight between the US and India became worse on Wednesday, August 27, when President Donald Trump’s administration officially placed a 25% tariff on Indian goods coming into the US. New Delhi has called this new tax “unjustified,” and it raises the overall tax on Indian goods to 50%. This puts India’s tariffs on the same level as those of Brazil and China.
The U.S. put on the extra levy because India kept buying Russian oil, which the Trump administration sees as a danger to U.S. national security and foreign policy. The first wave of 25% tariffs went into effect on August 7 and was similarly related to the imports of Russian oil. The U.S. Department of Homeland Security’s official notice revealed that Indian commodities “entered for consumption” on or after 12:01 a.m. Eastern Daylight Time on August 27, 2025, would be subject to the new 25% tariff.
A Timeline of Negotiations That Didn’t Work Out
After months of fruitless trade talks between the two countries, which were supposed to end with a limited trade pact by the fall, these punitive tariffs were put in place.
In February 2025, President Trump and Prime Minister Narendra Modi meet in Washington and agree that by 2030, the two countries should have $500 billion in commerce.
March to April 2025: Officials from both countries have many rounds of discussions, and early reports say things are going well.
June 2025: As officials say there is a standstill, especially over taxes on dairy and agricultural goods, hopes for a speedy resolution start to wane. Reports say that PM Modi turned down Trump’s invitation to supper.
July 2025: The talks came to a halt. PM Modi says in public that India won’t rush into a deal just to satisfy deadlines and won’t give up on the interests of its farmers. Trump announces the first 25% tax on July 31, saying it has to do with Russian oil.
The first 25% tax goes into effect on August 7, 2025. India calls the measure “unfair and unjustified.” Peter Navarro, an adviser to the White House, says that India is “cozying up” to Chinese President Xi Jinping. The planned visit of a U.S. trade mission to India has been called off.
How it affects different parts of India and what India does about it
The new 50% tariff is likely to have a big effect on a number of important parts of the Indian economy, especially industries that need a lot of workers. Experts say that textiles, gems and jewelry, seafood, and auto parts will be hurt the hardest. Small and medium-sized businesses (MSMEs) are especially at risk because they make up a large share of India’s exports in these areas. The Federation of Indian Export Organizations (FIEO) says that textile and clothing makers in important areas like Tirupur and Noida have already stopped making things since their items are no longer competitive in the U.S. market.
As a result, the Indian government has stood fast, with Prime Minister Modi saying he will not give in on the needs of farmers and small businesses. To fight the tariffs, India is pushing for the “Make in India” and “Swadeshi” programs to get people to buy more things made in India. Reports say that the administration is also thinking about making big changes to policies, such making the GST system easier to understand, to make the economy stronger and less dependent on trade with other countries.