How New Tariffs on Indian Goods Could Impact US-India Trade Relations

New Tariffs Imposed on Indian Imports

New York/Washington: The recent 25% tariff imposed by former US President Donald Trump on India's imports of Russian oil has officially taken effect, raising the total tariffs on Indian goods to 50%.

According to a draft order from the Department of Homeland Security (DHS) released on Monday, these increased tariffs will apply to Indian products that are either consumed or withdrawn from warehouses starting at 12:01 AM Eastern Daylight Time on August 27, 2025.

On August 7, Trump had announced these reciprocal tariffs, which also affected around 70 other countries.

The US President had previously stated that tariffs on Indian goods would double to 50% due to India's purchases of Russian crude oil, while allowing a 21-day period for negotiations.

In response, Prime Minister Narendra Modi emphasized that he would not compromise the interests of farmers and small industries, stating, "Pressure on us may increase, but we will endure it."

The DHS order specifies that products from India, except those listed in section 3 of Executive Order 14329, will face the additional tariff if they are consumed or withdrawn after the specified time.

However, Indian goods that are already in transit to the US before the deadline will be exempt from the new tariffs, provided they are cleared for use or consumption by September 17, 2025, and the importer certifies this to US Customs.

Mark Linscott, a Senior Advisor at The Asia Group, remarked that the US and India have turned what could have been a beneficial trade relationship into a detrimental situation.

He noted that trade discussions are currently fragile as both nations navigate the complexities surrounding Russian oil purchases, hoping for a resolution that acknowledges the importance of their relationship.

Nisha Biswal, also from The Asia Group, warned that the 50% tariffs would significantly disrupt the Indian textile and garment market in the US, eliminating the previously low tariff rates negotiated by the USTR.

She expressed concerns about the implications for the China+1 strategy, which had encouraged companies to shift production to India.

Basant Sanghera, another Managing Principal at The Asia Group, stated that these secondary tariffs could severely harm US-India economic relations and India's manufacturing goals.

He emphasized the need for direct engagement between Modi and Trump to restore trust and find a viable agreement.

US Treasury Secretary Scott Bessent has accused India of profiting from reselling Russian oil, while India has labeled the tariffs as "unjustified and unreasonable."