India-U.S. Trade Tensions Rise as Trump Threatens 25% Tariff
- U.S. President Donald Trump warns of up to 25% tariffs on Indian goods if trade issues aren’t resolved soon.
- Despite months of negotiations, no trade deal has been finalized; another round of talks is expected in August.
- Higher tariffs may affect India’s export edge, while nations like Vietnam, Japan, and the EU remain better positioned.
In a sharp warning that could impact India-U.S. trade relations, U.S. President Donald Trump has said that Indian products could soon face tariffs as high as 25 per cent if ongoing trade negotiations between the two nations fail to reach a resolution. Speaking to reporters, Trump remarked, 'They will have to pay 25%', in response to a question about possible tariff hikes, as reported by CNN.
Although the U.S. President referred to India as a 'friend' and a 'good partner', he criticized what he described as unfair tariff practices by India. “India puts more tariffs on us than almost any other country. That’s not fair”, he said, while flying back to Washington from Scotland.
Trump’s statement comes as both countries struggle to finalize a comprehensive trade agreement. The President has repeatedly demanded better market access for American goods in India and has employed similar pressure tactics in negotiations with other countries. Talks between the two nations have been ongoing for several months, but a final agreement has not yet been reached.
In April, Trump imposed a 26 per cent tariff on Indian imports, calling them 'reciprocal tariffs', but later paused the implementation. With an August 1 deadline looming, Indian officials are accelerating efforts to reach a settlement. Despite continued diplomatic engagement, the prospect of a tariff hike remains a significant concern for Indian exporters.
If the U.S. does proceed with a 20–25 per cent tariff on Indian goods, India could still retain a slight competitive edge over Bangladesh in the textile market. However, other trade partners such as Vietnam (20 per cent), Indonesia (19 per cent), the European Union and Japan (15 per cent each), and the UK (10 per cent) would remain more competitively positioned. Chinese goods currently face the highest U.S. tariffs at 30 per cent.
Indian negotiators, led by Rajesh Agrawal, recently completed the fifth round of discussions in Washington in July. Though the four-day session yielded no breakthrough, talks are expected to resume when a U.S. delegation visits India in the second half of August, according to PTI.
Meanwhile, U.S. Trade Representative Jamieson Greer stated that more time may be needed to finalize the deal.
