What are the current US tariffs on Indian goods?

The United States has put a two-tiered tax regime on Indian imports starting of August 2025. A 25% tariff went into force on August 7 and another 25% "penalty" tax is scheduled to go into effect on August 27. This raises the overall duty to 50% on the majority of Indian goods.

Why did the US impose these tariffs on India?

India's ongoing purchases of cheap Russian crude oil, which the US administration has declared a "national security" issue and a danger to US foreign policy, are the direct cause of the levies. For Russia, the US views this commerce as a direct lifeline.

Which Indian products are most affected by the US Tariffs?

1. Textiles and Apparel 2. Gems and Jewellery 3. Marine Products 4. Leather and Footwear 5. Automobiles and Auto Parts

How do the US tariffs on India compare to those on other countries?

India and Brazil are at the top of the list of nations with the highest import tariffs in the United States due to the 50% tariff rate. Compared to the tariffs imposed on many of India's major Asian competitors, like China (30%), Bangladesh (35%), and Vietnam (20%), this is a substantial increase.

What has been India's official response to the US Tariffs?

According to the Indian government, the action is "unfair, unjustified, and unreasonable." Indian officials have declared that the nation will take all necessary steps to safeguard its interests and that a solution will be found through discussion, even while bilateral trade negotiations continue. Additionally, the Ministry of Defense has refuted rumors that India is halting US defense acquisitions.

Imports of US Tariffs on Indian Goods, 2025

Author

Kanak Singh

Created

August 9, 2025August 9, 2025

Reading time

7 min

Table of Contents

Introduction

India and Brazil are now the two countries with the highest US tariffs after the US increased its extra duty on India, citing New Delhi’s ongoing purchases of Russian oil.
In the process of negotiating a bilateral trade agreement, India is evaluating the effects and safeguarding its interests while denouncing the United States and the European Union for their discriminatory imports of Russian goods and targeting India’s oil purchases.
Additionally, arguing that oil imports are driven by market forces and the need for energy security for its 1.4 billion population, India defended its energy policy as an issue of national security.

What Factors Led to the US Imposing Tariffs on India?

Stalled Trade Negotiations: The US expressed worries about India’s conservative approach to liberalizing sensitive sectors like agriculture and dairy, which prevented the two countries from reaching a trade agreement after multiple rounds of negotiations.
High Tariffs and Barriers: India’s high tariffs and several non-tariff obstacles, especially in the pharmaceutical, electronics, and agricultural sectors, have alarmed the US since they lead to unequal market access.
Purchase of Russian Oil and Defense Equipment: Because it affects the execution of sanctions, the US expressed worries about India’s ongoing purchases of Russian military hardware and oil and suggested possible actions.
US Trade Deficit with India: The US has been considering tariffs to resolve trade imbalances since highlighting a persistent $45 billion trade deficit with India.
Comparative Pressure: India is under growing pressure to abide by the terms of the advantageous agreements the US has made with allies like Japan and Vietnam in order to maintain its competitiveness in international commerce.

What are the Implications of the US Tariffs on India?

Oil Imports
- As India looks for affordable energy to fulfill its expanding demand while balancing geopolitical issues in its energy sourcing, it imports 88% of its crude oil, with a considerable amount (more than 35% of its crude oil) coming from Russia. This is one of the factors driving the US tariffs decision.
Significant Hit to Exports and Key Sectors
- About 10% of India’s total exports to the US will be directly impacted by the US tax, which will effect almost $87 billion worth of commodities each year.
- The industries most at risk are textiles, clothing, jewelry, electronics (particularly smartphones), pharmaceuticals, and auto parts.
- 65% of India’s exports to the US, which include goods from industries like textiles, jewelry, footwear, chemicals, and machinery, may be impacted by the new levy.
Pressure on Economic Growth and Jobs
- In its July 2025 report, the Asian Development Bank revised its FY 2025-26 projection down to 6.5% from 6.7%, indicating that economists expect a negative impact on India’s GDP growth.
- Analysts warn of job losses in all export-related businesses, particularly in labor-intensive, highly dependent on the US market textiles and jewelry.
Loss of Cost Competitiveness
- Products from other Asian nations, such as Vietnam (which only faces a 20% US tax), Indonesia, and Japan, are now more competitive than those from India.
- India’s position as a major “China plus one” manufacturing base in global supply chains may be threatened by this competitive disadvantage, which may encourage US consumers to replace Indian goods with alternatives from nations with lower tariffs.
Disruption to US-India Trade Relations
- The action strains diplomatic relations and dashes hopes that the US will grant India preferred trade status. It might compel India to expedite talks or grant additional trade concessions.
- Future agreements become more dubious as a result of the deadlock, which also reflects wider differences over India’s economic policy, access to agricultural markets, and relations with Russia.
Financial Market and Business Impact
- When the decision was first made, the Indian stock markets responded unfavorably, and the share prices of more than 40 Indian-listed companies with an export focus fell precipitously.
- Exporters might have to pass on costs or absorb a portion of the US tariffs, which might reduce demand and reduce profit margins.

What Can Be Done to Reduce the Impact of US Tariffs on India?

Accelerate Negotiations
- In an effort to secure a “fair, balanced, and mutually beneficial” accord, the Indian government has already indicated that it is committed to strengthening trade negotiations with the United States.
- More rounds of negotiations have been planned by both administrations for August.
- In the upcoming months, tariffs may be rolled back or moderated with the aid of accelerated discussions and the exploration of tactical agreements (without endangering fundamental interests like agriculture and MSMEs).
Diversify Export Markets
- Trade links with other major economies are being actively pursued by Indian governments and business leaders.
- Indian companies can lessen their reliance on US consumers and recover lost demand by expediting free trade agreements with the European Union, Gulf countries, EFTA, and the East Asian bloc.
Enhance Domestic Competitiveness and Product Value
- To make Indian products more competitive internationally, industry experts advise concentrating on structural improvements, increasing productivity, and innovating.
- This involves going up the value chain in industries like engineering, electronics, pharmaceuticals, and textiles so that, despite tariffs, Indian exports continue to be appealing because of their superior quality, cutting-edge features, or other benefits.
Support and Protect Vulnerable Sectors
- Protecting important export industries including textiles, auto parts, jewelry and gems, and MSMEs has been a top priority for the administration.
- Targeted subsidies, quicker export duty refunds, export credit, and marketing support are among potential strategies to lessen the immediate effects and help companies withstand the demand shock.
Strategic Diversification
- India should diversify its Middle Eastern and African imports to lessen its reliance on Russian crude oil and steer clear of being overly dependent on one source.
- This change should encourage domestic sourcing in an effort to increase the resilience of the supply chain and draw capital to more environmentally friendly energy methods.

Conclusion

In 2025, heightened US tariffs on Indian goods threaten exports, jobs, and bilateral trade ties, driven by disputes over Russian oil imports and market access. India’s response—diversifying markets, boosting competitiveness, and accelerating negotiations—will be crucial. Balancing national security in energy policy with economic diplomacy remains key to mitigating losses and safeguarding long-term trade interests.

Frequently Asked Questions (FAQs)

What are the current US tariffs on Indian goods?
The United States has put a two-tiered tax regime on Indian imports starting of August 2025. A 25% tariff went into force on August 7 and another 25% “penalty” tax is scheduled to go into effect on August 27. This raises the overall duty to 50% on the majority of Indian goods.
Why did the US impose these tariffs on India?
India’s ongoing purchases of cheap Russian crude oil, which the US administration has declared a “national security” issue and a danger to US foreign policy, are the direct cause of the levies. For Russia, the US views this commerce as a direct lifeline.
Which Indian products are most affected by the US Tariffs?
1. Textiles and Apparel
2. Gems and Jewellery
3. Marine Products
4. Leather and Footwear
5. Automobiles and Auto Parts
How do the US tariffs on India compare to those on other countries?
India and Brazil are at the top of the list of nations with the highest import tariffs in the United States due to the 50% tariff rate. Compared to the tariffs imposed on many of India’s major Asian competitors, like China (30%), Bangladesh (35%), and Vietnam (20%), this is a substantial increase.
What has been India’s official response to the US Tariffs?
According to the Indian government, the action is “unfair, unjustified, and unreasonable.” Indian officials have declared that the nation will take all necessary steps to safeguard its interests and that a solution will be found through discussion, even while bilateral trade negotiations continue. Additionally, the Ministry of Defense has refuted rumors that India is halting US defense acquisitions.

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