India faces steep U.S. tariffs beginning August 1, as trade talks with Washington drag on. U.S. President Donald Trump confirmed the move in a Truth Social post, citing India’s high tariffs, trade barriers, and continued energy and defence ties with Russia.
He accused India of maintaining “obnoxious” non-monetary barriers and warned that the country would pay a 25% tariff, plus an added penalty, unless a new deal is signed.
Despite five rounds of negotiations, India and the U.S. remain deadlocked. Talks are scheduled to continue in mid-August, but the August 1 deadline stands firm. An Indian official said discussions were “progressing well,” but admitted a deal was unlikely before the cutoff. India has resisted U.S. pressure to open key sectors such as dairy and agriculture. These areas remain politically sensitive and central to India’s rural economy.
Meanwhile, Washington is pushing for wider access and fewer restrictions, especially on genetically modified crops and large-scale food exports.
Indian exporters in pharmaceuticals, auto parts, electronics, and gems could lose their pricing edge. U.S. buyers are holding back on orders, uncertain about post-deadline rates. Earlier this year, Indian firms rushed shipments to avoid penalties. Now, future orders especially for the October–March season will remain in limbo. India’s trade surplus with the U.S., valued at over $45 billion in 2024, may shrink as competitors like Vietnam and Indonesia face lower duties.
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Beyond economics, the tariffs risk disrupting deeper U.S.-India cooperation. Washington sees India as a counterweight to China and a growing defence ally. But with Trump linking trade to India’s energy ties with Russia, the relationship is under strain.
For now, the 25% tariff is set to take effect. The question is whether diplomacy or damage comes next.
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