India-US Tariff War: America imposed 25% tariff on India, the country will suffer this much loss every year

India-US Tariff War: Six decades ago, in 1964, the film Sangam starring Raj Kapoor, Rajendra Kumar and Vyjayanthimala ruled the hearts of the audience. The climax song of this film 'Dost...dost na raha...' is still as relevant and popular today. This song seems to be a sarcasm on India-US relations in today's times and especially the alleged friendship between Donald Trump and Narendra Modi. Trump's recent decision to impose a 25% tariff on India has brought this friendship into discussion again. This article highlights the impact of that tariff, the reasons behind it and its economic implications for India.

Trump-Modi friendship: Expectations and reality

When Donald Trump took over as US President again in 2025, the whole world felt that the friendship between India and America would touch new heights. The closeness between Trump and Modi was not hidden from anyone. Events like 'Howdy Modi' and 'Namaste Trump' between the two leaders showed this relationship to be stronger. Many experts believed that under Trump's leadership, India would not only become a shining star in the global economy but would also emerge as an alternative to China. But the 25% tariff decision dashed these hopes.

25% Tariff: The biggest burden on India

Trump announced the imposition of a 25% tariff on India from August 1, 2025, which is much higher than the tariff imposed on other countries. In comparison, 15% tariff has been imposed on Japan, 20% on Vietnam, 19% on Indonesia, and 15% on European countries. This tariff on India is not only harsh from an economic point of view, but also indicates a deadlock in the ongoing bilateral trade agreement (BTA) talks between the two countries.

Trump cited India's high tariffs, purchase of military equipment and energy from Russia, and non-monetary trade barriers as the reasons behind his decision. He wrote on social media, "India is our friend, but their tariffs are the highest in the world. They have harsh non-monetary trade barriers. In addition, India buys military equipment and energy from Russia, which is not acceptable in the context of the Russia-Ukraine war."

Estimation of economic losses

A report by Citi Research in March 2025 estimated the possible effects of tariffs on India. According to this report, India may lose about $ 7 billion (about Rs 61 thousand crores) annually. The most affected sectors include:

Chemicals: India's chemical exports, especially petrochemicals, were about $ 4 billion in 2024.

Metal products: These include products made of steel and other metals.

Jewellery: India exported pearls, gems and jewellery worth $ 8.5 billion in 2024.

Automobiles and medicines: Exports of medicines were worth $8 billion, while automobiles and food products will also be affected.

India Ratings and Research (Ind-Ra) had also warned that India's exports to the US could fall by $2 to $7 billion in FY26. India had exported $74 billion to the US in 2023, and imposed a weighted average tariff of 11%, which is 8.2% higher than the US tariff.

Rationale behind the tariffs

Trump cited the trade deficit with India as the main basis for his decision. According to him, India's high tariffs and non-monetary trade barriers are harmful to US interests. Apart from this, India's military and energy partnership with Russia also prompted Trump to take this step. Trump said, "Everybody wants Russia to stop killing in Ukraine, but India is Russia's largest energy buyer."

India's response and future

India has not yet given any official response to Trump's decision. However, negotiations on a bilateral trade agreement between the two countries are ongoing. The fifth round of talks concluded in Washington last week, and the US team is scheduled to visit India next month. India's Special Secretary Rajesh Agarwal and US Trade Representative Brendan Lynch are leading the process.