On August 6, 2025, US President Donald Trump signed an executive order ramping up U.S. tariffs on Indian goods from an existing 25% to a staggering 50%—aligned with claims that India continues to purchase discounted Russian oil, which Trump argued indirectly funds war efforts in Ukraine. The additional 25% component takes effect 21 days after August 7—that is, starting August 28, 2025.

Why the U.S. Took This Step

The White House framed the tariff escalation as a necessary response to India’s ongoing energy ties with Russia, equating indirect support for Russia’s war in Ukraine with justifying harsher trade measures. This marks the most significant downturn in U.S–India trade relations in years, coming just before Prime Minister Modi’s previously planned visit to China.

Impact on Indian Businesses

• Textiles & Apparel (Ludhiana and beyond)
  Indian exporters—especially in Punjab’s textile hubs—are already seeing halted orders and existential concerns over competitiveness as the U.S. becomes less viable at doubled tariffs. Industry leaders are calling it a “death knell.”
• Jewellery & Gem Sector (Gujarat, Mumbai)
  The U.S. accounts for nearly 30% of India’s gem and jewelry exports. Tariffs now reaching 50% are devastating not just profits, but artisan livelihoods and the industry’s cultural heritage. Traders warn of rising costs, difficulty relocating operations, and increased currency and supply chain pressures.

Economic Forecasts

• Moody’s Ratings warns that India’s economic growth could slow by about 0.3 percentage points from its forecast of 6.3%, directly attributing the risk to the steep tariff.

• Barclays and Goldman Sachs suggest the tariffs might serve more as political posturing, although they could significantly disrupt key sectors—Goldman even sees India’s GDP growth possibly slipping by up to 0.6 percentage points.

Indian Government and Industry Responses

• Prime Minister’s Message: Modi has pledged not to compromise on national interests, particularly those of farmers, dairy producers, and fishermen—even at political cost.

• State-Level Concerns: The Kerala government is actively evaluating localized economic impacts and urging firm central government action.

• Industry Appeals: Commerce bodies, especially in shrimp exports, are demanding emergency aid, including working capital increases and moratoriums—especially worrisome for exports worth ~$2 billion.

What Lies Ahead

India is expected to pursue a multi-pronged strategy:

• Push multilateral negotiation via WTO or revitalizing stalled trade talks

• Diversify export markets toward the EU, ASEAN, Latin America

• Offer urgent relief across affected sectors via subsidies, credit, and export incentives

• Explore strategic options like local production hubs or deepened regional trade partnerships