Trump’s decision to raise tariffs to 50 per cent took effect on 27 August 2025, doubling the earlier 25 per cent duties imposed in early August. The administration justifies the measure as punitive, intended to press India to end its fossil fuel trade with Russia amid the Ukraine conflict.
The economic fallout is already evident. Analysts warn exports could plummet by over 40 per cent—equivalent to a loss of nearly $37 billion in the fiscal year—jeopardising vital sectors such as textiles, gems, jewellery, furniture and seafood. That would imperil thousands of jobs and strain India’s growth trajectory.
In parallel, the White House trade adviser, Peter Navarro, offered a conditional reprieve: India could see the new tariffs halved to 25 per cent if it ceased buying Russian oil. Navarro framed the energy purchases as inadvertently supporting Russia’s war machinery—arguing that continued imports impose added burdens on American taxpayers and businesses.
India’s leadership has pushed back vehemently. Prime Minister Narendra Modi’s administration described the tariffs as unjustified and harmful to a critical national interest—securing affordable energy for 1.4 billion citizens. Officials warn that the new duties could render exports to the US commercially unviable, trigger job losses and hamper the broader economic rebound.
Diplomatic friction has intensified against a backdrop of broader geopolitical realignments. Analysts view this tariff escalation as the most severe rupture in US‑India relations since the 1998 nuclear sanctions era. India is reportedly bolstering its ties with BRICS and preparing for Prime Minister Modi’s first visit to China in seven years—moves interpreted as hedging against mounting US pressure.
Critics, including several former diplomats and strategic commentators, warn that the move undercuts two decades of bipartisan efforts to strengthen ties with New Delhi. Some argue that this could shift India’s strategic orientation closer to Russia and China—undermining shared interests in regional stability and countering Beijing’s influence.