India Strikes Back: How New US Tariffs are Reshaping Global Trade

On August 7, 2025, the United States government shocked global markets by announcing an additional 25 percent tariff on all Indian imports. This came just a week after a previous 25 percent tariff was set to take effect on August 1. Combined, these measures raise the total tariff on Indian goods to 50 percent. The decision, made under the administration of President Donald Trump, has triggered a wave of economic, diplomatic, and political responses across the world.

The reason behind the tariff increase is rooted in the United States’ growing frustration with India’s continued imports of Russian crude oil. Washington argues that such trade indirectly supports Russia’s military activities in Ukraine. India strongly denies this accusation. It says its oil purchases are driven by economic needs and energy security for its 1.4 billion people. India insists that it is acting in accordance with international law and responsible global behaviour.

These new trade measures are the part of a broader trend in 2025. The US began imposing a general 10 percent tariff on all imports in April. Soon after, India was hit with a 26 percent country-specific tariff. However, this was suspended for a period of 90 days. The pause ended in July. On July 30, the US announced a fresh 25 percent tariff on Indian imports. Less than a week later, another 25 percent was added, raising the total to an alarming 50 percent. The External Affair Ministry of India briefed that they are following all these developments closely. They reveal that India now faces one of the highest tariffs among US trading partners.

How the Indian Economy is Being Affected

India’s annual exports to the US range between 66 billion and 83 billion dollars. The Punjab, Haryana and Delhi Chamber of Commerce and Industry (PHDCCI) estimates that these new tariffs will affect about 8.1 billion dollars worth of exports. That amounts to nearly 9.3 percent of India’s exports to the US and 1.87 percent of its global merchandise exports. The predicted hit to India’s GDP is about 0.19 percent. However, others believe the real impact could be much higher, possibly around 0.4 percent of GDP.

Several key export sectors are to get directly affected. Pharmaceuticals, a major Indian strength, account for 8 billion dollars in annual exports and are exempt from the new tariffs. This is one area of relief. But most other sectors are not so lucky. The Auto components, which form part of the 21 billion dollar auto-mobile exports, face a 23.1 percent tariff gap. The gems and jewellery industry, which exports 9.9 billion dollars annually, faces a 13.3 percent tariff gap. Petrochemicals, worth 4 billion dollars, now have an 8.6 percent cost burden. Seafood, fish, and meat exports, totalling 2.58 billion dollars, are hit by a steep 27.83 percent increase. Processed foods, sugar, and cocoa products face tariffs close to 25 percent. The textile sector, which brings in 9.6 billion dollars, will have to absorb a 1.4 percent tariff. Electronics are also impacted. Over half of Apple iPhones are assembled in India. These and other electronic products now face tariffs between 1.2 and 10.8 percent.

The Indian rupee has weakened following the announcement. Stock markets have shown a negative reaction. In Parliament, opposition leaders have demanded debate. They are calling it a diplomatic and foreign policy failure and a blow to India’s global standing.

India’s Firm and Measured Response

India has taken a calm but firm approach to this eventuality. The Ministry of External Affairs has strongly criticised the US action. It called the move unfair, unjustified, and unreasonable. India is determined to protect its own economic interests. A US trade delegation is expected to arrive in New Delhi for talks. Discussions are also underway at the World Trade Organisation.

India is not relying only on legal and diplomatic routes. It is also turning inward to strengthen its economy. The government is expanding its “swadeshi” or self-reliance programme. Production-Linked Incentive schemes are being broadened. These focus on sectors like electronics, semiconductors, and renewable energy. Exporters are being encouraged to explore alternative markets in Europe, Africa, Latin America, and Southeast Asia. The aim is to reduce over-dependence on the US. India is also investing in building strong global brands and adding value to its exports. This is seen as a long-term strategy to become less vulnerable to geopolitical tensions.

Global Solidarity from BRICS Nations

At the BRICS summit held in Rio de Janeiro on July 6 and 7, 2025, there was strong support for India. Brazil, Russia, China, South Africa, and new BRICS members like Egypt and Indonesia stood with India. Brazilian President Lula da Silva spoke directly with Prime Minister Narendra Modi. Brazil also launched WTO consultations to challenge the US tariffs on India’s behalf. BRICS nations jointly criticized the trend of rising protectionism. They said such actions damage the global trading system. The group is now actively working to build intra-BRICS trade corridors. There are also discussions on promoting local currency trade. Since 2022, India and Russia have already been trading in rupees, reducing their reliance on the US dollar.

President Trump has threatened to extend tariffs to other BRICS countries. He even hinted at a 10 percent levy for what he calls “anti-American” policies. The response from BRICS was defiant. President Lula explicitly stated that the world does not need an emperor. Global analysts have warned that if the situation continues, it may harm the rules-based trade system built after World War II.

A Path Forward for India

Despite this serious challenge, India’s economy remains strong. In the first quarter of 2025, India’s GDP growth exceeded 7 percent. This is higher than that of China and many developed economies. Industry experts warn that the US consumer may ultimately pay a higher price. Costs of generic drugs, garments, electronics, and seafood could rise. This may also add to inflation in the United States. India is determined to turn this crisis into a new beginning. The focus is now on accelerating reforms, building new partnerships, and boosting domestic manufacturing. The week ahead is important. Talks with the US, discussions at the WTO, and coordination within BRICS will play a crucial role in shaping the next steps.

India is not backing down. Instead, it is choosing a path of strategic resilience and global cooperation. With careful diplomacy, smart economic reforms, and support from international partners, India hopes not just to recover but to rise stronger and more self-reliant than before.

Ranjan Das

Patkai Christian College