US Tariffs on Indian Goods Take Effect, Threatening Jobs and Exports
August 27, 2025
US President Donald Trump’s doubling of tariffs on Indian goods has officially taken effect, with duties now reaching up to 50% on a wide range of products, escalating trade tensions between the two strategic partners.
The tariffs include a 25% levy on goods linked to India’s purchases of Russian oil, adding to an existing 25% duty on many Indian exports. Items affected include garments, gems and jewellery, footwear, sporting goods, furniture, and chemicals. Experts warn that thousands of small exporters, particularly in Gujarat—Prime Minister Narendra Modi’s home state—could face significant challenges, with potential job losses across sectors.
Exemptions and Support Measures
US Customs has provided a three-week window for Indian goods already in transit to the US, allowing them to enter at previous tariff rates until September 17. Certain products, including steel, aluminum, passenger vehicles, and copper, remain subject to separate tariffs under the Section 232 national security trade law.
The Indian Commerce Ministry has assured exporters that financial assistance will be available and encouraged diversification to alternative markets such as China, Latin America, and the Middle East.
Trade Talks and Political Fallout
The tariff increase follows five rounds of unsuccessful negotiations, during which India had hoped for a 15% cap, similar to rates applied to other major US trade partners like Japan and the European Union. Analysts cite political misjudgments and missed signals as reasons for the failed talks between the world’s largest and fifth-largest economies.
India exported $87 billion worth of goods to the US in 2024, with an estimated 55% of these exports affected by the new tariffs. Competitors like Vietnam, Bangladesh, and China may benefit from the disruption, potentially impacting India’s growing position as an alternative manufacturing hub to China.
Maintaining Strategic Ties
Despite trade tensions, both countries reaffirmed their commitment to strong bilateral and security ties. Senior officials from the US and India met virtually, emphasizing the importance of continued cooperation. Both nations also reiterated their commitment to the Quad, a strategic partnership with Australia and Japan.
