50% Tariffs On Indian Goods From Aug 27 — Will Trump’s Move Really Sting Economy? Here’s What S&P Global Says

The United States is set to impose cumulative 50% tariffs on Indian goods from August 27, 2025, unless an ongoing round of trade negotiations delivers a breakthrough. The move follows US President Donald Trump’s decision to double earlier tariff measures in response to India’s continued imports of Russian oil.

Despite the scale of the tariffs, S&P Global Ratings expects little effect on India’s growth. “India is not a very trade-oriented economy, and exports to the US account for only about 2% of GDP,” said YeeFarn Phua, S&P’s Asia-Pacific sovereign ratings director. Key sectors like pharmaceuticals and electronics are exempt, and India’s growth outlook remains at 6.5% for the current year.

Phua added that foreign investment into India is unlikely to be deterred, as many companies are setting up operations to serve its large and growing domestic market rather than focusing solely on US exports.

Notably, the US remains India’s largest trading partner, accounting for 18% of exports and 10.7% of total bilateral trade. In 2024–25, trade between the two countries reached USD 186 billion, with India recording a goods trade surplus of USD 41 billion.

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It is iportant to note that the new regime will apply a flat 50% duty on Indian merchandise, with additional most-favoured nation (MFN) tariffs on certain items. For example, knitted apparel will face an extra 13.9% MFN tariff, bringing the total to 63.9%, while woven apparel will attract 60.3% in combined duties.

Together, knitted and woven apparel exports to the US were worth about USD 5.5 billion in 2024–25, according to the Global Trade Research Initiative (GTRI).

Other affected sectors include diamonds, gold and jewellery, machinery, metals (steel, aluminum, copper), textiles, organic chemicals, carpets, and furniture, with effective duties ranging from 51% to 59%. Smartphones, pharmaceuticals, and petroleum products will be exempt, although petroleum exports will still attract a 6.9% MFN tariff.

Talks for an interim trade deal have been under way for months, but differences remain—particularly over US demands to open India’s agriculture and dairy markets, which New Delhi views as sensitive for rural livelihoods. India and the US began formal negotiations for a Bilateral Trade Agreement in March, targeting an initial conclusion by October–November 2025.

Trump first announced 25% tariffs earlier this year, then added another 25% in August, citing oil imports from Russia. The White House says the measure is part of a broader policy of “reciprocal tariffs” announced in April.

Meanwhile, Commerce and Industry Minister Piyush Goyal told Parliament that the government is assessing the impact and will take all steps to protect national interests.