US to enforce 25% tariffs on India effective August 1, Trump announces
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For his tariffs on India that will go into effect on August 1, Trump cites unfair trade practices.
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US President Donald Trump gestures as he arrives on the South Lawn of the White House in Washington, DC, on July 29, 2025. Trump returned to Washington following a trip to Scotland (AFP)
US President Donald Trump announced that the United States will impose a 25% tariff on Indian goods starting August 1, 2025. In a post on Truth Social, Trump criticized India's trade practices, citing what he described as excessively high tariffs on American products and "the most strenuous and obnoxious" non-monetary trade barriers. He stated that the decision aims to protect US manufacturers and address what he called an unfair trading relationship.
"India charges us tariffs that are among the highest in the world," Trump said. "It’s time we stood up for American workers."
The 25% tariff will apply to a wide range of Indian exports, including key sectors like pharmaceuticals, textiles, and technology services. The Trump administration has emphasized that this move is part of a broader effort to renegotiate trade deals and restore what it considers fair trade conditions.
In April 2025, Trump threatened to impose tariffs as high as 27% on Indian goods. These threats were temporarily put on hold pending ongoing trade negotiations. However, after what Trump described as stalled talks and insufficient progress, the 25% tariff decision was finalized.
US-India trade relations
The US is India's largest export destination, with bilateral trade totaling about $190 billion in 2024. Indian exports to the US include pharmaceuticals, information technology services, textiles, and machinery. The new tariffs threaten to disrupt these sectors and may lead to retaliatory measures from India.
The Trump administration has maintained that the 25% tariff will serve as leverage to push for a more equitable trade agreement. Despite five rounds of negotiations, major sticking points remain, particularly over India's resistance to allowing genetically modified crops and expanded dairy market access.
India defends high agricultural tariffs
Indian officials, however, argue that high agricultural tariffs are essential to protect the livelihoods of millions of small-scale farmers who depend on stable domestic prices. Allowing greater access to foreign agricultural and dairy products could severely disrupt the rural economy and food security. There is also widespread public resistance to genetically modified crops, which India has been reluctant to permit.
US officials under the Trump administration have also criticized India for continuing to purchase defense and energy products from Russia. Trump specifically pointed to India’s growing ties with Russia as a strategic concern amid the ongoing conflict in Ukraine. The Trump campaign has argued that India’s continued procurement of Russian military equipment and discounted oil undermines Western sanctions and complicates geopolitical alignments.
India's trade policy evolution
India’s trade policies have gone through notable transformation over the past several decades. Post-independence, India adopted a protectionist strategy centered around import substitution and state-led industrialization. The era of the "License Raj" saw some of the highest global tariffs, extensive import licensing, and significant restrictions on foreign investment.
The 1991 economic crisis marked a turning point, prompting India to liberalize its economy. The reforms included slashing tariffs, dismantling import licensing, and encouraging foreign investment. As a result, India's average tariffs dropped from 80% in the early 1990s to approximately 10% by 2008, and its trade-to-GDP ratio increased substantially.
More recently, however, India has shown signs of returning to strategic protectionism. Through initiatives like "Made in India" and "Atmanirbhar Bharat" (Self-Reliant India), the government has promoted domestic manufacturing while introducing quality control measures and non-tariff barriers for numerous imported goods. These policies have drawn criticism from several trade partners, including the United States.
India’s response
Although Indian officials have not issued a formal response to the new tariffs, sources suggest that the government is preparing contingency plans, including exploring new export markets and trade partnerships. Despite recent pressures, India's broader trade strategy remains focused on balancing domestic industrial development with international engagement. The latest US tariffs are expected to test the resilience of this approach as India seeks to maintain its global economic standing while addressing the needs of its local industries.
