On August 6, 2025, Trump increased tariffs on many Indian goods by 25%, bringing the total tariffs up to 50%. This move has raised concerns about its impact on India’s economy and the stock market.
In this article, we will discuss about Trump’s Additional tariffs, Tariff Implementation dates, the List of percentage increases on products, and economic impacts and market reaction to the tariff announcement.
The US President Donald Trump announced the additional tariffs on Indian goods on 6 August 2025 which are getting imported in US. This follows an earlier 25% duty implemented on August 1, 2025, targeting India’s continued purchase of Russian oil amid geopolitical friction over the Russia-Ukraine war (conflict).
The tariffs were the highest the US charged on any of its other trading partner. This high tariffs has caused a lot of worry in India because it puts their $87 billion worth of exports to the US at risk and is making the relationship between the two countries tense.
The US and India share a robust trade relationship, with bilateral trade reaching $190 billion in 2024. India’s top 3 exports to the US include
while the US runs a $45.7 billion trade deficit with India.
Historically, trade negotiations have aimed to address this imbalance, with India reducing tariffs on US goods like bourbon whiskey and motorcycles.
The recent tariffs are justified under section 232 (national security) and section 301 (unfair trade practices) of US trade laws, and they also reflect geopolitical motives that were tied to India’s Russian oil purchases and BRICS membership.
Date | Event | Tariff Announcement |
April 2, 2025 | Announcement of reciprocal tariffs | The US announced a 26% tariff on Indian goods, later adjusted to 25%. |
April 5, 2025 | Baseline tariff effective | A 10% baseline tariff on all imports, including India, was implemented. |
April 9, 2025 | Delay of nation-specific tariffs | The 16% nation-specific tariff for India was delayed for 90 days until July 9. |
July 8, 2025 | Extension of delay | The delay period for nation-specific tariffs extended to August 1. |
July 30, 2025 | Announcement of 25% tariff plus penalty | The US declared a 25% tariff on Indian goods, effective August 7, with an unspecified penalty for Russian oil purchases. |
August 1, 2025 | Initial 25% tariff effective (corrected from earlier reports) | 25% tariff (10% baseline + 15% reciprocal) applied to Indian goods. |
August 7, 2025 | Executive order for 25% tariff implementation | The White House issued an executive order confirming a 25% tariff on Indian goods, effective immediately, with exemptions for pharmaceuticals, electronics, and energy. |
August 27, 2025 | An additional 25% tariff is effective | An additional 25% tariff was implemented, bringing the total to 50% for most Indian goods (except exempted sectors). |
October 5, 2025 | Grace period for in-transit goods | Goods loaded onto ships before August 7 and arriving before October 5 are subject to the earlier 25% tariff rate, not the 50% rate. |
The tariff structure on Indian goods combines a baseline 10% duty with a 25% reciprocal tariff, which was announced by Trump on April 2, 2025, and an additional 25% tariff effective 21 days after August 7, 2025. Unlike China, which faces a 30% tariff, or Vietnam and the Philippines at 20%, India and Brazil face the highest rate of 50%.
There are some exemptions that apply to pharmaceuticals, semiconductors, energy resources (crude oil, natural gas), and critical minerals, sparing key sectors like India’s generic drug exports, which account for 50% of the US market.
Because of this tariff, the sectors like textiles, gems and jewellery, leather, marine products, chemicals, and auto components face significant exposure, with 55% of India’s US-bound exports at risk.
Product Category | Tariff Rate (August 7, 2025) | Tariff Rate (August 27, 2025) |
Textiles & Apparel | 25% | 50% |
Gems & Jewelry | 25% | 50% |
Leather & Footwear | 25% (20.8–29.51% for footwear) | 50% (45.8–54.51% for footwear) |
Marine Products | 33.26% (25% + 2.49% anti-dumping + 5.77% countervailing) | 58.26% (50% + 2.49% + 5.77%) |
Chemicals (Organic) | 25% | 50% |
Automobiles & Auto Parts | 25% | 50% |
Iron, Steel, Aluminium | 25% (5–12.5% for industrial goods) | 50% (30–37.5% for industrial goods) |
Agricultural Products | 25% (e.g., onions at 25.54%) | 50% (e.g., onions at 50.54%) |
Machinery & Engineering Goods | 25% | 50% |
Ceramic, Glass, Stone | 25% | 50% |
Rubber Items | 25% | 50% |
Paper & Wood Products | 25% | 50% |
Furniture | 25% | 50% |
Dairy Products | 56.46% (buttermilk, fermented milk); 30.84% (milk powder) | 81.46%; 55.84% |
Pharmaceuticals | 0% | 0% |
Electronics & Semiconductors | 0% | 0% |
Energy Products | 0% | 0% |
Critical Minerals | 0% | 0% |
The tariffs threaten India’s $434 billion export engine, with $87 billion directed to the US, equivalent to 2.5% of India’s GDP. Industry estimates suggest a $4–5 billion drop in engineering exports alone, while overall GDP growth could decline by 0.2–0.5%, with forecasts revised from 6.5% to as low as 6%.
The sectors like Small and medium enterprises (MSMEs), which dominate textiles and leather, face reduced competitiveness against rivals in Vietnam and Bangladesh, where tariffs are lower.
The Indian rupee has weakened in offshore markets, raising concerns about imported inflation and increased borrowing costs for foreign debt-laden companies.
Indian stock markets reacted positively on the day, with the Sensex and Nifty gaining on August 7, 2025, as the additional 25% tariff was announced. Sectors like gems and jewellery, automobiles, and textiles saw significant pressure, while IT services, FMCG, and banking remained relatively insulated due to limited US exposure.
The Nifty Pharma index, however, rose 2.73% due to tariff exemptions for pharmaceuticals. Foreign institutional investor (FII) flows have turned volatile, with currency depreciation exacerbating capital flight risks.
India’s Ministry of External Affairs condemned the tariffs as “unfair, unjustified, and unreasonable,” emphasising the country’s sovereign right to make energy decisions. Rather than immediate retaliation, India is pursuing a multi-pronged strategy.
India has also highlighted Western double standards, noting that the US and EU continue trading with Russia while pressuring India.
The tariffs aren’t just about money also about politics. The US is unhappy with India because India buys a lot of oil from Russia and is part of a group called BRICS, which the US sees as a challenge to its power. Even though China buys more Russian oil, the US gave China lower tariffs, probably because the US is still negotiating trade deals with them.
This is different from the friendly relationship Trump showed when he met India’s Prime Minister Modi in early 2025. Experts say these tariffs are like “economic blackmail” to try to force India to give in to US demands.
The US waiting 21 days before adding the extra 25% tariff gives both countries a chance to talk and try to make a deal. If they agree, the tariffs might be lowered to about 15–20%. But some tough topics, like farming and dairy, are hard to solve. India needs to protect its farmers and small businesses while also making trade deals.
These tariffs also show that the World Trade Organisation (WTO) can’t always solve problems quickly, and India might fight back with its own tariffs. In the long run, India might work harder to rely on itself and sell its products to more countries so it doesn’t get stuck in this situation again
The US’s 50% tariff hurts India’s export industries and economy, especially textiles, gems, and small businesses. India is responding carefully with diplomacy, industry support, and exploring new markets. It must stay strong and smart to protect its interests in a changing global landscape.
Also Read: Reciprocal Tariffs 2025: Impact on India’s US Export Trade