India-US Trade Deal: Donald Trump Threatens 500% Tariff On India - Explained

The highly discussed trade deal between India and the United States has not yet been finalised, even as the deadline for a new wave of tariffs set by the US President Donald Trump is close at hand. Meanwhile Trump has also threatened 500% tariffs on India.

What Is India Doing About The Situation?

According to a Reuters report citing a government official, a delegation from India is expected to visit Washington soon in a fresh attempt to break the deadlock over duties on auto components, steel, and farm products.

These items have become the key sticking points in the trade negotiation between India and the US.

India is one of the few countries that are still in talks with the US to negotiate a trade deal at a time when Trump's administration is preparing to enforce steep new tariffs on imports from several nations starting August 1, 2025.

Previously, a team of India officials had also traveled to the US for trade talks, but the visit ended without a breakthrough. There were several disagreements that still remained on sensitive areas like market access for American agricultural products and tariff reductions on high-value industrial goods.

Where Is India's Tariff Letter?

While at least 14 other countries have received formal letters from the US, notifying them of upcoming tariffs ranging from 25% to 40%, India has not received such a letter yet. This is an indication that negotiations are still alive, but time is running out.

Further adding to the pressure is a bill that could have even more drastic consequences.

A bipartisan bill which was introduced by Senators Lindsey Graham and Richard Blumenthal, the Sanctioning Russia Act of 2025 aims to punish countries that continue to buy Russian oil and other energy products. As part of this bill major importers like China and India will be targeted with tariffs as high as 500%.

"I’m looking. It’s totally my option. They pass it totally at my option, and to terminate totally at my option. And I’m looking at it very strongly," Trump told reporters during a Cabinet meeting.

This will be an extreme imposition on India and failure to reach a trade agreement will impact key Indian sectors like gems and jewellery, marine products, pharmaceuticals, electronics and steel, which are highly dependent on the US market.

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