On July 30, the US President Donald Trump imposed 25 percent reciprocal tariffs on various Indian goods exported to the US market[1]. The reciprocal tariffs officially came into effect on August 7, 2025[2]. Just the day before the reciprocal tariffs came into effect, the US president announced additional 25 percent tariffs on Indian products on the premise of India’s buying Russian oil and hence funding the Russian war machinery in Ukraine. The tariffs came fully into effect on August 27, 2025[3].
Background
Since 1975, India enjoyed the Generalized System of Preferences (GSP) status in trade with the US.[4] Under the GSP, 3,500 Indian products had free access to the US market.[5] In 2018 alone, duty concessions under GSP were about US$240 million.[6]Trump revoked this special status in 2019 on the pretext that India did not provide equitable and reasonable access to its market.[7]After his ascendency to power again this year, the US president unleashed a global tariff campaign against friends and foes alike to lower US trade deficits. As the US has a trade deficit of US$87.3 billion with India in goods,[8] it was charged 26 percent tariffs in April, then lowered to 25 percent the same month.[9] When the tariff was postponed for 90 days, many countries, including Japan, South Korea, the United Kingdom, and Pakistan, struck trade deals with the US before the deadline. India failed to do so, resulting in Trump’s imposition of reciprocal tariffs on July 30. To further pressure India and maximize leverage in ongoing trade negotiations, Trump imposed an additional punitive 25 percent tariffs on Indian products.[10] According to the New Delhi-based think tank, Global Trade Research Initiative (GTRI), 66 percent of Indian products are subjected to US tariffs averaging 50 percent.[11] The impacts on various Indian industries, however, are uneven. The hardest-hit sector is the labor-intensive textile and apparel industry, which makes up 18 percent of India’s exports to the US. Even a 5–10 percent price hike can make Indian goods uncompetitive against Vietnam, Bangladesh, and Pakistan.[12]
