Workers assemble circuit boards at Zetwerk Electronics in Bengaluru, India. Multinational companies had banked on India’s future growth, with its young population and strong political stability. Photo / Saumya Khandelwal, The New York Times
President Donald Trump has followed through on his threat to impose a 50% tariff on nearly all goods arriving from India, levelling one of his most punitive tariffs at a country with deep ties to the United States.
The 50% rate, half of which is punishment for India’s buying Russian oil, is expected to damage many Indian exporters that collectively employ millions of people.
The move could rupture America’s expanding economic relationship with India, where two-thirds of the largest US corporations have offshore operations.
And the tariff also undermines the stability of billions of dollars of foreign investment in India’s stock market, the world’s fourth largest.
Trump’s extraordinary levy puts India at a disadvantage in the new trading order the President set in motion when he announced tariffs on dozens of countries in April.
Trump has declared a ceasefire with China, which ran a more than US$1 trillion global surplus last year and is considered the principal antagonist in his trade war.
In that context, the 50% tariff on India risks undermining a key strategy used more by US importers in recent years to shift production to India to lessen their dependency on Chinese factories.
Recent weeks have brought a turnabout for India, which was confident that its importance to the US and the rapport between its Prime Minister, Narendra Modi, and Trump would earn it a reprieve.
Now India is alone with Brazil — led by a leftist president who has antagonised Trump directly — with 50% tariffs, higher than any other country.
Trump startled India on July 30, when he said imports from that country — a big exporter of generic pharmaceuticals and precious gems — would be subjected to a tariff of 25%.
That was several points higher than India’s competitors in Asia, and only one point lower than the rate Trump had initially threatened on April 2.
Then on August 6, he stunned Indian negotiators, who had thought they could seal a better deal this autumn.
Trump, by then focused on trying to secure a cessation of Russia’s war on Ukraine, said he would hit India with an additional 25% tariff, starting on August 27, for buying Russian oil.
It did not help that India had been denying Trump’s claim that he single-handedly brought about the end of a conflict India had with Pakistan in May.
Trump has long complained that India is a “tariff king” in its own right, deploying tariffs and other trade barriers to its unfair advantage.
India does have a history of embracing both tariffs and, more recently, onerous quality-certification procedures to protect its producers from foreign competition.
Those measures have affected US exports of some goods that Trump watches closely, like Harley-Davidson motorcycles and golfing gear, which have sometimes faced tariffs of 100% or more.
This year, progress in trade negotiations was slow, and India’s protection of its farmers, a politically sensitive domestic issue, remained a friction point.
Indian officials had hoped they could appease Trump by expanding its purchases of American energy and defence equipment, appealing to his fundamental grievance of the imbalance in overall trade.
India’s energy imports from the US reached US$6.6 billion in the first six months of 2025, a 70% increase over the same period last year, Indian officials said. But that hasn’t seem to have counted for much.
Now American tariffs are being wielded openly in pursuit of other US aims.
On Monday, Vice-President JD Vance said on NBC that these were “secondary tariffs on India, to try to make it harder for the Russians to get rich from their oil economy”.
It was a swift turn for Vance, who had brought a sunny sense of optimism when he visited India in April.
“This is a great place to do business,” he told an audience in Jaipur. On India’s relationship with the US, he said: “This is very much a win-win partnership and certainly will be far into the future”.
Four months later, the Trump Administration has declared economic war against its onetime partner.
Setting aside the higher costs that the 50% tariff will level on American importers, it will have a crushing impact on India’s textiles, chemicals, machinery, gems and jewellery, and dozens of smaller industries.
The tariff hands Modi a difficult political card to play at home.
He braced Indians for the collision with the US, using words to inspire memories of India’s struggle for freedom from British colonialism 100 years ago.
He has avoided mentioning Trump or tariffs directly. On Tuesday, he told the audience at a groundbreaking ceremony that his first priority was to defend India’s small-business owners, shopkeepers, and farmers.
“No matter how much pressure is put on us, India will prevail,” he said.
Defending the common man from politics “driven by economic self-interest” will be his first priority, he promised.
It was implicit that India’s economic dependence on the US, with which it participated in more than US$200b worth of trade in goods and services last year, would be curtailed, maybe in favour of China, Japan, Europe or other partners.
Finance professionals who track India’s economy are predicting that the tariffs will slow, but not stop, India’s growth, which is among the fastest for large countries.
The banks Morgan Stanley and Citigroup have forecast a drop of less than 1% in the speed of India’s economic growth, from around 6.5%.
India’s economy, already one of the five biggest in the world and expected to join the US and China in the top three within the next few years, has weathered other storms of foreign making.
The global financial crisis of 2008 did relatively little damage to India, which depended less on international capital than most big countries and was cushioned by its giant consumer market.
India in 2025 is much more integrated into the world economy, and the disruption that the new tariffs have caused is already being felt.
Only shipping containers arriving from India after midnight will face the full 50% burden. But orders have been cancelled and postponed for weeks now.
Damage done to the sense of trust between Indian and American businesses is already plain to see far from the shipping ports.
That relationship has been cultivated by both sides’ diplomats and policymakers for more than 25 years.
It is poised to spread beyond the concerns of importers and exporters.
This article originally appeared in The New York Times.
Written by: Alex Travelli
Photographs by: Saumya Khandelwal, Eric Lee
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