US President Donald Trump on Wednesday announced a sweeping 25% tariff on India starting August 1st.
“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE – ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST 1st. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!” he said in a post on TruthSocial.
Later in the evening, the Ministry of Commerce and Industry issued a statement saying the government is studying the implications of the US President’s statement.
“India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective,” it said.
“The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs,” it said.
“The Government will take all steps necessary to secure our national interest, as has been the case with other trade agreements including the latest Comprehensive Economic and Trade Agreement with the UK,” it added.
Trump’s reference to India’s purchase of Russian oil comes against the backdrop of the Russian Sanctions Act, 2025, which has been introduced in the US Senate and House of Representatives. It proposes to impose 500% duties on countries that buy oil or other petroleum products from Russia.
India and the US had held the fifth round of talks last week in Washington but failed to reach an agreement.
During a media interaction on Tuesday, Trump had hinted that the US was preparing to impose a higher tariff on India.
Speaking to reporters on Air Force One on his way back to Washington from Scotland, he was asked if the deal with India had been finalised.
“No, it’s not,” Trump had replied.
The US has reached trade agreements with the UK, Indonesia, Vietnam, Philippines, Japan and the European Union recently. The US also came to a preliminary agreement with China that reduced the tit-for-tat tariffs imposed on each other.
For its part, India signed a free trade agreement with the UK during PM Narendra Modi’s visit to the country last week.
The US had previously announced a 26 percent reciprocal tariff against India in April, which was suspended as bilateral talks got underway.
Indian exporters are now set to take a hit as Trump’s announcement marks a steep increase from the 10 percent baseline tariff on Indian shipments to the US.
Meanwhile, the Indian rupee on Wednesday logged its steepest single-day fall in over three years, dropping by 89 paise to close at an all-time low of 87.80 against the US dollar.
Indian industry expressed disappointment over the announcement and said that it may impact the country’s exports and add to the worsening global trade situation.
Trump’s move is seen as a “major setback” in bilateral relations at a time when New Delhi is striving to become an alternative destination to China for American investors and traders, a former US Trade Representative official said.
“While there were early indications that a trade deal with India was imminent, it turned out that this was not possible,” Senior Vice President of Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler said in a statement.
Though the Indian IT services sector is not directly impacted by the 25 per cent tariff , the ripple effects could be significant, said Nitin Bhatt, Technology Sector Leader at EY India,l reported PTI. He warned that rising input costs in the US may lead American firms to cut back on discretionary tech spending, affecting demand for Indian IT services.
The announcement comes amid existing macroeconomic uncertainty and the growing influence of AI, both of which are already weighing on the sector. India’s top IT firms have reported muted, single-digit growth in Q1FY26, and TCS is preparing to lay off over 12,000 employees as part of a broader strategy to align with future business priorities.
Bhatt noted that companies which adopt hybrid delivery models, diversify geographically, and embed AI at scale would be better positioned to navigate the challenges posed by an increasingly volatile global landscape.
Opposition parties on Wednesday launched a scathing attack on the Modi government after the tariff were announced, they accused the Prime Minister of compromising national interest for photo-ops and PR with Trump.
Congress general secretary Jairam Ramesh said Modi’s “taarif” with Trump had yielded little. He accused the PM of stopping Operation Sindoor prematurely in hopes of securing a trade deal, which eventually fell through. “What was the use of that capitulation in the first place?” he asked.
Trinamool’s Derek O’Brien mocked Modi’s past endorsement of Trump with the slogan “Abki Baar Trump Sarkar”, saying, “56 is less than 25,” in a jibe at Modi’s “56-inch chest” remark.
The CPI, CPI(ML), RJD, DMK and other Opposition leaders termed the tariffs an “insult to India” and questioned the PM’s silence in Parliament. CPI general secretary D Raja accused Trump of arm-twisting India’s foreign policy while Congress MP Manickam Tagore called it “a failure of diplomacy” that placed Modi’s image above India’s interests.
Ruling NDA MPs backed Prime Minister Modi after Trump’s tariff move, saying India would not “sit quietly” and will protect its interests. BJP’s Pratap Sarangi said the Opposition was trying to humiliate Modi but “all their moves fail”. The government said it is studying the implications and remains committed to a fair trade deal.
