On August 27, President Donald Trump’s sweeping tariffs on Indian exports officially came into force, doubling the duty levels to a staggering 50%. The punitive measure, aimed at penalizing India’s continued imports of Russian oil, marks one of the steepest tariff hikes ever imposed by the United States.
The tariffs target a broad spectrum of Indian goods—including garments, footwear, gems and jewellery, furniture, chemicals, textiles, and shrimp—accounting for around 66% of India’s annual exports to the U.S. Analysts warn that affected sectors could see export volumes collapse by up to 70%, jeopardizing potentially hundreds of thousands of jobs. In monetary terms, India’s exports to the U.S. could decline from over $87 billion in 2024 to as low as $49–50 billion in 2025.
India has denounced the tariffs as “unfair, unjustified, and unreasonable,” arguing that its purchase of discounted Russian oil is a pragmatic choice to safeguard energy security amid global supply disruptions, a stance New Delhi insists is no different from U.S. or European trade with Russia.
In response, Prime Minister Narendra Modi has unveiled a slate of economic relief measures, including $12 billion in income tax cuts, a streamlined two-tier GST system, and a renewed push for self-reliance (“Atmanirbhar Bharat”) by promoting domestic consumption. India is also accelerating efforts to diversify export destinations, leveraging existing trade agreements with markets such as the U.K., Australia, UAE, and beyond.
At the ground level, exporters especially small and medium-sized enterprises are scrambling to adapt. Many are offering discounts to retain U.S. buyers, frontloading shipments ahead of further cost hikes, or pivoting to alternative markets.
Market reactions remain mixed. While some industry analysts downgraded Indian equities due to the uncertain trade climate, India’s domestic stock indexes held firm, buoyed by strong fundamentals and expectations of economic resilience.
On the diplomatic front, the move has inflicted a political blow to the long-standing strategic partnership between Washington and New Delhi. Although channels for dialogue remain open, trust has frayed, raising concerns about the future of cooperation on defense, technology, and regional strategy.
