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U.S. President Donald Trump’s doubling of tariffs on Indian goods to as much as 50% took effect on Wednesday, escalating tensions between the world’s two largest democracies despite their close strategic partnership.
The new levies combine a punitive 25% duty linked to India’s purchases of Russian oil with Trump’s earlier 25% tariffs on a wide range of products. The combined rate now applies to exports such as garments, gems and jewellery, footwear, sporting goods, furniture and chemicals—among the highest U.S. tariff levels globally, on par with those imposed on China and Brazil.
The move threatens thousands of small exporters and jobs in India, including in Prime Minister Narendra Modi’s home state of Gujarat. Indian Commerce Ministry officials said affected exporters would receive financial assistance and be encouraged to diversify into new markets such as China, Latin America and the Middle East.
A U.S. Customs and Border Protection notice offered a brief reprieve, granting a three-week exemption for Indian goods already in transit before the deadline. Those shipments may still enter the U.S. at the lower tariff rate until September 17. Separate duties on steel, aluminium, passenger vehicles, copper and other products under the Section 232 national security law remain unaffected.
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The tariff hike followed five failed rounds of negotiations, with Indian negotiators hoping Washington would cap the increase at 15%, in line with rates granted to Japan, South Korea and the European Union. But White House trade adviser Peter Navarro confirmed the higher tariffs would proceed without compromise.
Analysts warn the measures could impact 55% of India’s $87 billion in merchandise exports to the U.S., benefiting competitors such as Vietnam, Bangladesh and China, and potentially undermining India’s role as an emerging alternative manufacturing hub to China for electronics and smartphones.
The trade dispute comes despite broader cooperation between the two countries. On Tuesday, the U.S. State Department and India’s Ministry of External Affairs issued identical statements reaffirming their commitment to strengthening ties, including defence cooperation and their partnership in the Quad alliance with Australia and Japan.
With two-way trade valued at $129 billion in 2024, and a $45.8 billion U.S. trade deficit, both sides face mounting pressure to find common ground as tariffs strain economic and political relations.
