US Imposes Steep 36 Percent Tariffs on Indian Imports Amid Trade Tensions Sparking Bilateral Negotiations
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US Imposes Steep 36 Percent Tariffs on Indian Imports Amid Trade Tensions Sparking Bilateral Negotiations
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As of late May 2025, the trade relationship between the United States and India is undergoing a dramatic shift. Earlier this spring, President Donald Trump, now in his second term, announced sweeping new tariffs as part of a broader “reciprocal tariff” regime. Effective April 5, 2025, a baseline 10 percent tariff was imposed on imports from virtually all countries. However, India found itself especially targeted: starting April 9, 2025, a country-specific tariff took effect, raising the rate on Indian goods entering the US by a further 26 percent. That means most Indian exports to America now face a combined tariff rate of 36 percent, subject to certain exemptions. Goods such as pharmaceuticals, semiconductors, energy, and copper are exempt, along with products with at least 20 percent US-origin content, which are taxed only on their non-US portion. According to S.S. Rana & Co., these tariffs were justified by the administration as a response to India’s own high trade barriers and are rooted in Section 301 authority of the US Trade Act of 1974, but are likely to face challenges at the World Trade Organization.
President Trump’s stated rationale for these tariffs has been to address the large and persistent US trade deficit, restore American manufacturing, and counter what he called non-reciprocal trade practices. The White House describes India’s average applied tariff rate as 17 percent, which is the highest among the world’s largest economies. For context, agricultural goods in India are subject to average tariffs of 39 percent, while non-agricultural goods average 13.5 percent. The US, meanwhile, maintains an average applied tariff of just 3.3 percent. The new tariffs, according to the White House fact sheet, will remain in effect until the administration determines the trade deficit threat is resolved.
In the midst of these escalating measures, there is also movement toward diplomacy. Early April saw the US and India announce the Terms of Reference for a new bilateral trade agreement. According to the Office of the US Trade Representative, the goal is to expand market access, reduce tariffs and non-tariff barriers, and build a results-driven agenda for mutual benefit. The United States welcomed India’s willingness to reduce certain tariffs as part of these negotiations, and there is anticipation of initial outcomes later this year.
For Indian exporters, the sudden tariff escalation has already created volatility and uncertainty, especially in sectors like textiles, agricultural products, and consumer goods. While some relief is available for select products, the overall impact is expected to be significant for bilateral trade flows in the coming months.
That’s all for today’s update on the US-India tariff front. Thank you for tuning in to India Tariff News and Tracker. Don’t forget to subscribe for future episodes. This has been a quiet please production, for more check out quiet please dot ai.
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