5 reasons why Trump has imposed 25 pc tariff on India
Trump says his tariff, taking effect Aug 1, was triggered by India’s high tariffs on US exports and deepening ties with Russia; there are other reasons, too
In a sharp escalation of trade tensions, US President Donald Trump has announced a 25 % tariff on Indian imports, set to take effect from August 1, 2025. The move marks a significant shift in US-India economic relations.
In January this year, Trump returned to the White House for a second term with a renewed focus on rebalancing trade deficits and protecting American industry. India, previously a key strategic partner in the Indo-Pacific, now finds itself in the crosshairs of Washington’s evolving trade doctrine.
There are five broad reasons that may have triggered Trump's decision, according to experts. Here they are:
1. Trade imbalance, retaliatory 'reciprocal' policy
Trump criticised India’s trade barriers, pointing out its average tariff rates of up to around 39 % on agricultural goods, while US duties on Indian exports remain in the low single digits. He framed the 25 % tariff as a “reciprocal” response aimed at correcting a persistent trade deficit of roughly US $45–46 billion.
2. High non‑tariff barriers
The US president labelled India’s non‑monetary trade restrictions as “strenuous and obnoxious”, blaming them for hampering American access to Indian markets and justifying stronger duties.
3. Defence and energy ties with Russia
Trump warned of unspecified additional penalties for India’s continued purchases of Russian military equipment and energy amid the Ukraine war, asserting that such ties are “not good” for US interests.
4. Breakdown in bilateral trade negotiations
Talks between New Delhi and Washington have faltered, especially over agriculture, auto, pharmaceuticals, and intellectual‑property reforms. India resisted US demands for tariff cuts in sensitive sectors such as farm markets and dairy, stalling progress toward a trade agreement.
5. Broader Liberation Day tariff campaign
The 25 % levy comes under Trump’s wider “Liberation Day” tariff regime launched in April, which initially imposed a 10 % baseline tariff on all partners and elevated rates (up to 26 % for India) on countries with which the US ran large deficits. India’s rate was being targeted to rise further before policy delays.