India-US Tariff War: Does India impose higher tariffs on America? Here is the answer to every question

India-US Tariff War: US President Donald Trump has announced a 25 per cent tariff on products imported from India and a penalty on buying crude oil and military equipment from Russia. This duty will come into effect from August 1, 2025. This step has been taken when both the countries are negotiating a trade agreement. Trump has also claimed that India is one of the countries imposing the highest taxes on America by calling India a 'tariff king'. Let us understand this announcement and its effects through questions and answers.

Question: What are tariffs?

Answer: Duty or tariff is a customs duty or import tax imposed on imported goods. The importer has to pay this duty to the government. Usually, companies pass on this cost to consumers, increasing the prices of products.

Question: What duties and penalties has the US announced against India?

Answer: The US has announced a 25 per cent tariff on all products imported from India. In addition, an undisclosed fine will also be imposed on India for buying crude oil and military equipment from Russia. The amount of this fine and the method of enforcement are not yet clear. An executive order from the White House will soon clarify the tariff structure.

In addition, steel and aluminum imported from India already attract a 50 per cent duty and vehicles and their components attract a 25 per cent duty. For example, the textile industry currently has a 6-9 per cent duty, which will increase to 31-34 per cent with an additional 25 per cent duty from August 1. Penalties may also be imposed on this.

Question: Why did the US impose this tariff?

Answer: The US claims that its trade deficit with India is very high. The Trump administration says that India imposes high tariffs on American goods, which limits American exports to the Indian market. Trump has termed it a 'tariff imbalance' and called this move an attempt to 'equalize' the trade.

Question: How much is the trade between India and the US?

Answer: The US remained India's largest merchandise trading partner in FY 2021-25. Bilateral trade between the two countries reached US$186 billion in 2024-25, with India's exports at $86.5 billion and imports at $45.3 billion. India's trade surplus with the US was $41 billion.

In services, India exported $28.7 billion and imported $25.5 billion, leaving a surplus of $3.2 billion. Overall, India's trade surplus with the US stood at $44.4 billion. However, according to the Global Trade Research Initiative, the US surplus could be $35-40 billion if education, digital services, financial activities, royalties and arms trade are included.

Question: Which products are mainly traded between the two countries?

Answer: Major products exported from India to the US include:

Medicines and biological products ($8.1 billion)

Telecommunications equipment ($6.5 billion)

Precious and semi-precious stones ($5.3 billion)

Petroleum products ($4.1 billion)

Gold and other precious metal jewellery ($3.2 billion)

Major products imported from the US to India are:

Crude oil ($4.5 billion)

Petroleum products ($3.6 billion)

Coal and coke ($3.4 billion)

Cut and polished diamonds ($2.6 billion)

Aircraft and spacecraft parts ($1.3 billion)

Question: What will be the US tariff on Indian products from August 1? Answer: From August 1, 2025, tariffs on major Indian products will be as follows:

Telecom equipment: 25 per cent

Gems and jewellery: 30-38.5 per cent (currently 5-13.5 per cent)

Food and agricultural products: 29-30 per cent (currently 14-15 per cent)

Apparel: 25 per cent in addition to 12 per cent

Apart from this, punitive duties may also be imposed on purchase of oil and military equipment from Russia.

Question: Is Trump's claim that India imposes higher tariffs on the US correct?

Answer: India's average tariff rate is 17 per cent, which is higher than the US' 3.3 per cent but at par with economies like South Korea (13.4 per cent) and China (7.5 per cent). However, the US also imposes high tariffs on some items, such as:

Milk products (188 per cent)

Fruits and vegetables (132 per cent)

Cereals and food items (193 per cent)

Minerals and metals (187 per cent)

So, Trump's claim is partly correct, but it is not one-sided, as the US also imposes high tariffs in some sectors.

Q: What will be the impact of these tariffs on India?

A: These tariffs could impact Indian exports, especially in labour-intensive sectors such as textiles, leather, footwear, gems and jewellery, carpets and handicrafts. Indian products will become more expensive in the US market, which could reduce their competitiveness, especially compared to countries such as Bangladesh (35 per cent tariff), Vietnam (20 per cent) and Thailand (36 per cent). This could result in lower Indian exports and trade surplus.