US President Donald Trump once again hit the Indian economy by imposing additional 25% tariffs on imports from India. With this increase, a total of 50% tariffs will be charged on the Indian-origin goods finding their way into the United States. In simple words, the cost of Indian imports will be unbearable for the US importers when we look at Pakistani and Bangladeshi goods that are available at below 20% tariffs. At present, Indian annual exports to the United States are around $85 billion, which are at stake now. In 2024, India’s annual exports amounted to $434 billion, including $85 billion to the United States.
On Tuesday, Indian stock markets and the Indian rupee suffered a big blow when the news of 25% additional US tariffs hit the markets. Trump has doubled tariffs on Indian-origin goods after Indian Prime Minister Modi stated that his government would not compromise on Russian oil imports, a fact that further infuriated Donald Trump.
Indian exporters are bracing for severe disruptions after the U.S. Department of Homeland Security confirmed that Washington will enforce an additional 25% tariff on all Indian-origin goods starting Wednesday. The move significantly ramps up trade pressure on New Delhi and could push duties on some goods to as high as 50% — among the steepest penalties imposed by Washington.
The decision follows President Donald Trump’s earlier announcement of punitive tariffs, citing India’s rising purchases of Russian oil as an indirect contribution to Moscow’s war efforts in Ukraine. According to U.S. officials, Russian oil now accounts for 42% of India’s total imports, up sharply from less than 1% before the conflict began.
The impact was immediately visible in financial markets. The Indian rupee weakened 0.2% to 87.75 per U.S. dollar, while both the Nifty 50 and BSE Sensex slipped 0.7% in early trading. Export-focused stocks, particularly in textiles, leather, processed foods, and marine products, came under pressure.
Indian exporter associations warned that nearly 55% of India’s $87 billion in merchandise exports to the U.S. could be affected, giving rivals such as Vietnam, Bangladesh, Pakistan, and China a competitive edge. The President of the Engineering Exports Promotion Council cautioned that exports may decline by 20–30% from September. He added that U.S. buyers have already begun halting fresh orders.
The government, however, has assured exporters of financial support, including subsidies on bank loans and assistance to diversify into alternative markets like China, Latin America, and the Middle East. Officials have identified nearly 50 target countries to redirect Indian exports, though industry leaders warn that diversifying markets quickly will be challenging.
Meanwhile, India’s diamond and jewelry sector — already struggling from weak Chinese demand — faces fresh hurdles as U.S. tariffs threaten to cut off access to its largest market, which absorbs almost one-third of annual exports worth $28.5 billion.
Analysts at Capital Economics estimate that if the full 50% tariffs remain in place, India’s economic growth could shrink by 0.8 percentage points in both 2025 and 2026, making it one of Asia’s steepest earnings downgrades.
Despite the tension, New Delhi insists it will continue sourcing oil based on economic considerations. Foreign Minister S. Jaishankar has pointed out that Washington’s objections have not been applied with equal intensity to other major Russian oil buyers such as China and the European Union.
With trade negotiations between the world’s largest and fifth-largest economies stalled, the tariffs have highlighted deepening political and economic strains. Prime Minister Narendra Modi has vowed to defend India’s economic interests, even if it comes at a heavy cost, while simultaneously seeking to improve ties with China ahead of his upcoming visit to Beijing — his first in seven years.
