US President Donald Trump’s decision to double tariffs on Indian imports to as high as 50% has taken effect, significantly escalating trade tensions between the two largest democracies and strategic partners. The move, which affects a wide range of Indian products, is expected to impact thousands of small exporters and jobs, especially in Prime Minister Narendra Modi’s home state of Gujarat.
The new tariffs, which were announced by the Trump administration, come as a direct consequence of India’s purchase of Russian oil, adding a punitive 25% tariff to the previously imposed 25% duty on a variety of Indian products. As a result, duties on goods such as garments, gems and jewellery, footwear, sporting goods, furniture, and chemicals now total up to 50%, one of the highest tariffs imposed by the US, on par with Brazil and China.
The tariff hike is expected to severely affect India’s small exporters and workers, with many industries in Gujarat, Modi’s home state, set to face significant disruptions. In response, the Indian Commerce Ministry has pledged to support affected exporters with financial assistance and urged them to look for new markets in China, Latin America, and the Middle East.
Despite these efforts, the new tariffs will likely have a broader impact on India’s $87 billion in merchandise exports to the US. Exporter groups estimate that nearly 55% of these exports could be directly affected, giving competitors like Vietnam, Bangladesh, and China a potential edge. Moreover, the prolonged tariffs could undermine India’s appeal as an alternative manufacturing hub to China, particularly in sectors such as smartphones and electronics.
The trade escalation follows five rounds of failed talks between US and Indian officials, with India hoping to cap the tariff hike at 15%, similar to the rates granted to Japan, South Korea, and the European Union. Officials on both sides have blamed political miscalculations and communication breakdowns for the failure to reach a resolution.
Despite the trade discord, both nations continue to highlight their shared security interests, particularly regarding concerns over China. Senior officials from both the US State Department and India’s Ministry of External Affairs met virtually this week, reaffirming their commitment to strengthening bilateral ties and advancing their partnership through the Quad, a strategic alliance involving the US, India, Australia, and Japan.
