Washington issues trade notice targeting India
The United States issued a notification on Tuesday, imposing 50% tariffs on most Indian exports, effective August 27, 2025. The notice, issued by the Department of Homeland Security, stated that the move was linked to India’s purchase of discounted Russian crude oil, which Washington alleges indirectly funds Moscow’s war in Ukraine.
The tariffs comprise 25% import duties plus a 25% penalty, and will apply to any Indian products entering the US market after the deadline.
The order follows Executive Order 14066, which prohibited imports of Russian-origin crude oil and petroleum products. While the executive order was initially directed at Russia, the US has now extended punitive measures to India for continuing its oil trade with Moscow.
Impact on Indian exports
The new tariffs are expected to cover nearly half of India’s $87.3 billion exports to the US, particularly affecting:
- Textiles and apparels
- Gems and jewellery
- Seafood (mainly shrimp)
- Leather goods
Notably, pharmaceuticals and electronics (including smartphones such as iPhones) are exempted.
Analysts warn that these punitive tariffs could make Indian goods non-competitive compared to regional exporters facing only 10–25% duties. The result is expected to be a sharp fall in orders from the US, India’s largest market for several sectors. Experts estimate potential GDP losses between 0.2% and 1% in FY26, equating to an economic contraction of $7–25 billion, depending on pricing and alternative market access.
The most severe impact is likely to fall on MSMEs (Micro, Small, and Medium Enterprises), which rely heavily on US orders, resulting in job losses and increased unemployment.
PM Modi’s defiant response
Ahead of the tariff implementation, Prime Minister Narendra Modi issued a strong statement in Ahmedabad, pledging unwavering support to small entrepreneurs, shopkeepers, farmers, and animal keepers.
“No matter how much pressure comes, we will never let harm come to small entrepreneurs and farmers. My government will continue to strengthen them. Today, Atmanirbhar Bharat draws its strength from Gujarat, built over two decades of hard work,” Modi said.
He reassured India’s MSMEs and farming communities that their interests would remain paramount despite the economic strain expected from US tariffs.
Foreign policy tensions
External Affairs Minister S Jaishankar sharply criticized Washington’s position, calling it hypocritical.
“It’s ironic for a pro-business American administration to accuse others of doing business. If you don’t like Indian oil or refined products, don’t buy them. Nobody is forcing you. But Europe buys, America buys. So if you have a problem, stop buying,” he said.
The move has been described by analysts as a “limited trade war” targeting India, particularly given that China—by far the largest buyer of Russian oil—has been exempted. Critics argue that the tariffs are disproportionate, politically motivated, and vengeful, pointing to Trump’s broader geopolitical and electoral strategies.
Economic and geopolitical outlook
While the tariffs are expected to hurt India’s export sector, the broader economy remains relatively shielded due to its heavy reliance on domestic consumption. Exports to the US make up only 2–2.5% of India’s GDP.
Still, the fallout could deepen trade tensions between New Delhi and Washington, disrupt supply chains, and strain bilateral ties ahead of critical global summits, including BRICS and the G20.
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We do not care Donald Trump nor worry his tarrifs. He is free to do & we are free to go our way on it. A person who backstabs & tells lies is not an inspiring leader. Ignore him.
Do we need analysts to tell us that the additional tariffs will affect Indian exports? If we as a nation have decided to face the tariffs as they come why this fear mongering, as if the economy is going to come to a standstill? There was a cost of the two and half, day war and we took it in it’s own stride, we will will beat the tariffs as well , it is a two way street, US will also have to some some effects.