India stood firm on Tuesday as the United States imposed a 50 per cent tariff on Indian goods, a move set to sharply strain trade ties between the two countries.
The higher levies, which double the previous 25 per cent tariff, took effect at 12:01 a.m. EDT (9:31 a.m. IST), in line with an executive order signed earlier this month by President Donald Trump.
According to Trump, the tariffs are aimed at pressuring Russian President Vladimir Putin into negotiations over the war in Ukraine.
However, the decision is expected to deliver a direct blow to Indian exports worth $60.2 billion, particularly in labour-intensive industries such as textiles, gems and jewellery, shrimp, carpets and furniture.
Exporter groups warned shipments could fall by up to 70 per cent, threatening millions of workers.
The new duties cover around 66 per cent of India’s exports to the United States, valued at $86.5 billion in the 2025 financial year.
If the tariffs remain, exports could decline to $49.6 billion next year, analysts say, with competitors such as China, Vietnam, Mexico and Bangladesh likely to benefit from the disruption in the American market.
The Trump administration confirmed the decision in a draft notification and, on Tuesday, the Department of Homeland Security formally issued a public notice through US Customs and Border Protection.
The notice implements Executive Order 14329, signed on August 6, which imposed an additional 25 per cent duty on top of existing tariffs, bringing the total to 50 per cent. The order took effect on August 27 following a 21-day notice period.
Vice President JD Vance defended the move calling it “aggressive economic leverage” against Russia. “Maybe we will apply additional pressure, or maybe we feel like we are making progress, and we will dial that pressure back. We still have a lot of cards left to play,” he said.
The measures follow five rounds of negotiations between Indian and US officials from March to July that failed to produce a breakthrough. On 30 July, Trump announced the first wave of tariffs on Indian goods, citing high trade barriers, and dismissed India’s economy as “dead.”
Exporter groups estimate the new tariffs could affect nearly 55 per cent of India’s merchandise exports to the US, valued at around $87 billion.
Moody’s Analytics warned that the higher duties will sharply reduce demand for Indian exports, forcing companies to cut prices to maintain market share. The report said this could squeeze margins, reduce wage growth and limit investment, weighing on overall business performance.
Some sectors are expected to be less exposed. Pharmaceuticals, smartphones and steel may absorb the shock due to exemptions in the tariff structure and robust domestic demand.
Still, the escalation risks spilling into broader strategic relations. Washington has long sought to deepen security and defence cooperation with India through the Quad grouping with Japan and Australia to counter China’s influence in the Indo-Pacific. Analysts said the tariffs could undermine these efforts at a critical juncture.
In Ahmedabad, Prime Minister Narendra Modi sought to reassure businesses and workers, saying India would not compromise on the interests of farmers, small industries and domestic producers.
“Pressure on us may increase, but we will bear it all,” he said. Modi urged Indians to prioritise swadeshi goods and insisted his government would find a path forward regardless of economic pressure from Washington.
Meanwhile, India has not issued any directive on oil purchases from Russia despite US pressure. New Delhi’s envoy to Moscow said India would continue buying oil from the most cost-effective sources.
“Our objective is energy security of 1.4 billion people of India, and India’s cooperation with Russia as well as several other countries has helped to bring about stability in the global oil market,” he said.
The Ministry of External Affairs has called the tariffs “unfair, unjustified, and unreasonable” and warned that India will take “all necessary steps to protect its national interests.”
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