India-US Tariff War: The US on Tuesday issued an official notification to impose an additional 25% tariff on India. This tariff will come into effect from 9:31 am on Wednesday, August 27, 2025 as per Indian time. Earlier, US President Donald Trump announced this tariff on August 6 in response to oil purchases from Russia and imposed a 25% tariff on India from August 7. Now the total tariff on Indian goods has become 50%.
The official order states, "The duty mentioned in this document will apply to goods imported from India, which will be used or warehoused in the US." Let us understand the impact of this tariff in detail.
1. Impact on Industries
Industries to be affected
This tariff by Trump may reduce the profits of companies in sectors like jewellery, textiles, auto, and seafood. Experts estimate that if there is no trade deal with the US or there is no reduction in tariffs, India's $48.2 billion exports will be directly affected.
Industries spared from impact
IT, pharmaceuticals, and electronics: These sectors will not be affected by this tariff. Electronics is exempted under Section 232, and until it is reviewed, there will be no impact on exports.
Pharma sector: Currently the tariff on pharma is 0%. Trump has threatened a 150% to 250% tariff in the future, but it has not been implemented yet.
IT sector: This is part of the service sector, so is out of the scope of the 50% tariff.
2. Impact on the common man
Threat to jobs
According to a CNBC report, India exports the most jewellery, clothes, machinery, and chemicals to the US. A 50% tariff will make these goods expensive in the US, which may reduce orders. A reduction in orders may force companies to reduce production, resulting in layoffs. However, it is difficult to accurately estimate how many jobs will be lost.
3. Impact on the economy
Government income and GDP
The 50% tariff will reduce Indian exports to the US, which will reduce government income. Experts estimate that India's GDP growth rate may fall by 0.2% to 0.6%. Apart from this, the government may have to change its trade policies.
4. Impact on international trade
New export strategy
To reduce dependence on the US, India will have to increase trade in Europe, Russia, and other countries. According to a Reuters report, the Commerce Ministry of India has prepared a new export strategy for about 50 countries. In this, special attention is being given to the markets of China, the Middle East, and Africa.
Free trade agreements
- India has signed trade deals with Iceland, Liechtenstein, Norway, and Switzerland, which will come into effect from October 1, 2025.
- The deal with Britain may come into effect from April 2026.
- Talks are going on with Oman, Chile, Peru, Australia, New Zealand, and the European Union.
Industry-specific markets
- Seafood: Russia, UK, EU, Norway, Switzerland, and South Korea.
- Diamonds and jewelry: Vietnam, Thailand, Malaysia, and Africa.
Russian oil and the reason for tariffs
India is the second-largest buyer of oil from Russia after China. Before the Ukraine war, India imported only 0.2% (68 thousand barrels per day) of oil from Russia, which increased to 45% (2 million barrels per day) by May 2023. From January to July in 2025, India bought 17.8 lakh barrels of oil per day from Russia. In the last two years, India has imported more than $130 billion worth of Russian oil every year. Trump cited this as a reason for the tariffs.
Important questions and answers
Question 1: What is a tariff and why did Trump impose it on India?
Answer: Tariff is a tax imposed on imported goods. Trump says that India imposes higher tariffs on American goods, while the US charges less tax on Indian goods. Considering it unfair, Trump imposed a 25% tariff under the 'reciprocal tariff' policy. In addition, an additional 25% tariff was added due to India's displeasure over buying oil and military equipment from Russia, taking the total tariff to 50%.
Question 2: Status of India-US trade deal?
Answer: Both countries have been working on a trade deal for a long time. The sixth round of talks was to be held on August 25, but it was postponed. Indian officials are hoping for an agreement by September or October 2025, but consensus has not been reached on issues like the agriculture sector. India is not ready to open genetically modified crops and dairy markets to the US.