Steep US tariffs begin hitting Indian exports after trade talks collapse
NEW DELHI: Indian exporters braced for heavy losses on Wednesday as Washington’s steep new tariffs on Indian goods officially came into effect, following the collapse of five rounds of trade talks between the two countries.
The U.S. Department of Homeland Security confirmed that an additional 25% duty will now be imposed, raising total tariffs on Indian goods to as high as 50% — among the highest rates ever enforced by Washington. The measure comes in direct retaliation to India’s surging purchases of Russian oil, which the U.S. has repeatedly criticized since the start of the Ukraine war.
Despite New Delhi’s attempts to negotiate a cap at 15%, both sides admitted that “political misjudgment” and missed signals derailed the talks. Indian officials had earlier signaled optimism, but the failure to compromise has now triggered one of the most serious trade disputes between the two allies in recent years.
Industry leaders warned that the new duties could devastate exporters, with nearly 55% of India’s $87 billion exports to the U.S. at risk. Affected industries include textiles, food products, gems and jewellery, leather, and engineering goods.
“The U.S. customers have already stopped placing fresh orders,” said Pankaj Chadha, head of the Engineering Exports Promotion Council, adding that shipments could plunge by 20–30% starting September.
Read More: Trump Imposes 50% Tariff on Indian Imports Over Russian Oil Purchases
The Indian government announced emergency relief measures, including subsidies on loans and incentives to diversify trade toward China, Latin America, and the Middle East. However, exporters remain skeptical, citing limited alternatives in the short term.
The economic impact was immediate: the Indian rupee slipped to a three-week low of 87.68 against the dollar, while benchmark stock indexes fell by 1% each, marking their sharpest decline in three months. Analysts warned the tariffs could shave off 0.8 percentage points from India’s GDP growth this year and next.
India’s diamond and jewellery sector, already weakened by falling Chinese demand, faces additional strain as U.S. buyers account for nearly one-third of the $28.5 billion market. Meanwhile, U.S. officials including Treasury Secretary Scott Bessent accused New Delhi of “profiteering” from Russian oil, which now makes up 42% of India’s imports compared to less than 1% before the Ukraine conflict.
Despite the escalating dispute, both sides stressed that defense cooperation, energy security, and their role in the Quad alliance with Japan and Australia remain intact. Foreign Minister S. Jaishankar defended India’s stance, noting Washington has not imposed similar measures on other major buyers of Russian oil such as China and the EU.
Prime Minister Narendra Modi vowed not to compromise farmers’ interests in any trade arrangement and is set to visit China later this month — his first trip to Beijing in seven years.
