NEW DELHI: India is bracing for fresh economic pressure as the United States under President Donald Trump rolls out a sweeping tariff regime, with Indian exports now facing a 25% duty effective August 1. The move comes after a series of aggressive executive actions since Trump’s return to the White House, marking one of the most significant shifts in US trade policy in decades.
The tariff escalation began on February 1, when Trump invoked emergency powers under the International Emergency Economic Powers Act (IEEPA), imposing a 10% tariff on Chinese imports and 25% on most goods from Canada and Mexico. These took effect on February 4, followed by a hike in Chinese tariffs to 20% on March 3. Tariffs on Canadian and Mexican goods followed.
On March 12, global tariffs on steel and aluminium were raised to 25% under Section 232, and later doubled to 50% for all countries except the UK by June 4. A 25% tariff on countries still importing Venezuelan oil took effect April 2, with further duties on automobiles and auto parts phased in.
April 2 marked a major shift as Trump declared a national emergency over the US trade deficit and imposed a 10% universal baseline tariff from April 5. A planned set of “reciprocal” tariffs for 57 countries was suspended for 90 days—excluding China.
India, despite being one of the United States’ largest trading partners, was excluded from tariff relief under Trump’s revised trade regime. On July 7, Washington confirmed country-specific tariffs, and month-end, it had finalised bilateral deals with the European Union, Japan, South Korea, and the UK—capping their tariffs at around 15%. India, however, was left out and now faces the full 25% duty on its exports, effective August 1.
The implications are considerable. India exported approximately $87 billion worth of goods to the US in 2024, with an estimated $66 billion now highly vulnerable to the new tariffs. Sectors such as textiles, gems and jewellery, and auto components are to be affected. Many of these industries are MSME-driven and regionally concentrated in Tamil Nadu, Gujarat, Maharashtra, and Karnataka.
Economists estimate the tariff impact could shave 20–50 basis points off India’s GDP growth in FY26. Financial markets reflected early concern: on August 1, the Nifty 50 slipped 0.35% and the Sensex fell 0.36%, with export-linked stocks under pressure. The rupee also weakened through July amid growing uncertainty.President Trump’s remarks further strained ties. “We’ve done very little business with India. Their tariffs are too high,” he said, citing India’s trade ties with Russia as justification.
With no deal in place, India faces the prospect of long-term trade friction unless it secures relief through a deal soon or diversifies export markets. For now, policymakers are exploring short-term buffers and accelerated trade talks with alternate partners. The real challenge lies in adjusting to a global trading environment increasingly shaped by unilateralism and strategic leverage.
Tariff timeline
01 Feb Trump issues Executive Orders under IEEPA, imposing a 10% tariff on all imports from China and 25% on most goods from Canada and Mexico (10% on Canadian energy exports)
04 Feb 10% tariff on China kicks in, but tariffs on Canada & Mexico begin after a brief delay; China’s tariff increases to 20%
12 Mar Global steel and aluminum tariffs rise to 25%
24 Mar Executive Order 14245 imposes a 25% tariff on imports from countries buying Venezuelan oil, effective April 2
26 Mar A Section 232 proclamation directs a 25% tariff on foreign autos and auto parts, effective April 3, for vehicles and May 3 for parts
02 Apr Trump designates ‘Liberation Day’ and signs Executive Order 14257, imposing a 10% universal baseline tariff effective from April 5; Higher reciprocal tariffs on 57 countries scheduled for April 9, but suspended for 90 days for most nations, except China
09 Apr Under Executive Order 14266, country-specific reciprocal tariffs paused until July 9, while 10% baseline remains active; China’s reciprocal tariffs are not suspended and continue to increase separately
12 May A temporary trade détente with China reduces its tariff rate from as high as 145% to 30%, with China reciprocating at 10% on US exports