Tariffs are taxes levied on imported goods. By increasing the cost of foreign products, tariffs aim to protect domestic industries but can also trigger international disputes.
▫️US Tariffs on India: In 2025, President Donald Trump imposed a two-step tariff on Indian goods—25% in April (Executive Order 14257), followed by another 25% effective August 27. Together, they amount to a 50% tariff affecting major sectors: textiles, gems and jewelry, auto parts, and seafood. These exports total about $80billion annually.
| Date | US Action | Impact |
|---|---|---|
| April 2025 | 25% tariff via EO 14257 | Initial shock to exporters, especially in textiles, gems, seafood |
| August 27, 2025 | +25% added (total 50%) | Markets and supply chains forced into emergency response |
▫️For the US: Tariffs boost government revenue and safeguard domestic manufacturing. They are designed to pressure India to cut Russian oil imports, indirectly targeting Russia’s wartime economy. However, these tariffs can increase prices for American consumers and disrupt supply chains.
▫️For India: Indian exporters face reduced competitiveness and profit margins. The high tariffs could decrease India's GDP growth by 0.5%, primarily affecting its labor-intensive sectors. This might result in job losses, small business closures, and the need to find new markets. On the upside, it could spur innovation and strengthen India's focus on domestic self-sufficiency.
▫️Global Ramifications: Tariffs can provoke trade wars, slow economic growth, and break supply chains. For instance, disruptions in India's diamond industry—world leader in polishing—could ripple through global markets, affecting jewelry prices and employment.
Tariffs are not just economic tools but instruments for policy, negotiation, and security. They are used to:
▫️Protect fledgling industries.
▫️Generate government revenue.
▫️Leverage negotiations in trade disputes.
For developing nations like India, resisting high tariffs is essential to sustain export-led growth, which drives roughly 20% of its GDP. Historically, excessive tariffs have isolated economies—like the US during the Great Depression. Today’s tariffs on India also reflect geopolitical tensions over the Ukraine war and energy dependence.
Despite a strong strategic alliance grounded in defense, technology, and initiatives like QUAD, tariffs reveal undercurrents of competition:
▫️Bilateral Trade: In 2024, trade between India and the US hit $190billion, with India exporting $80billion and importing $40billion.
▫️Tariffs: India maintains high tariffs on US agricultural imports (average 39%), while the US targets Indian steel and aluminum products.
▫️Recent Developments: The 2025 tariff hike has strained talks, with US officials calling India “recalcitrant.” Still, experts believe India’s long-term prospects remain solid, given diversification and positive ratings from agencies like S&P.
India has sustained a strong economic and defense relationship with Russia:
▫️Trade Volume: $68.7billion in 2024–25, mostly energy and defense.
▫️Russian Oil: Russia supplies 45% of India’s oil; discounted crude provides both economic relief and strategic leverage amid Western sanctions.
▫️Technology Sharing: Russia supports India's self-reliance, transferring tech in major deals, like the Su-57 stealth jets.
This partnership provides energy security and defense autonomy, but risks US displeasure and exposure to secondary sanctions.
Make in India, launched in 2014, aims to boost manufacturing and reduce import dependence:
▫️Target: Raise manufacturing to 25% of GDP (from ~16%).
▫️Features: Liberal FDI norms, new industrial corridors, focus on 27 sectors.
▫️Achievements: Defense production tripled between FY14 and FY25; $500billion in FDI.
Atmanirbhar Bharat: Introduced in 2020, emphasizes local production using incentives like Production-Linked Incentives (PLI) worth ₹2 lakh crore over 14 sectors, aiming to slash import reliance.
Defense Indigenization: Recent bans on importing over 4,000 defense items promote local manufacturing, MSMEs, and homegrown startups through schemes like Operation Sindoor.
These dovetail with India’s demographic strengths (median age 29) and IT sector leadership.
The tariffs frames as an assault on Indian autonomy. Here’s a contextual analysis:
▫️US Tariffs Linked to Russian Oil: US justifies the tariffs as a penalty for India's Russian oil deals, but critics see it as undermining India's self-reliance. India points out ongoing EU-US trade with Russia.
▫️India as a Western “Eyesore”: India's economic momentum and youth demographics drive self-reliance; tariffs reinforce efforts like Atmanirbhar Bharat.
▫️Titanium Production: India entered the top 5 global producers in 2025, vital for aerospace and defense, aligning with self-reliance goals.
▫️Calls to Boycott US Brands: Symbolizes resistance, but full disengagement is unlikely given deep economic ties.
▫️Defense Self-Reliance: Operations like Sindoor highlight Indian-designed weapons, with MSMEs and startups participating.
▫️Defense Output Expansion: Production tripled since FY14, with defense exports reaching ₹21,000 crore in 2024.
▫️Russian Support: Russia offers advanced jets (Su-57) with tech transfer, challenging Western offers and supporting Make in India.
▫️Economic Resilience: India's inflation was at a multi-year low (1.55% in July 2025). Goldman Sachs projects India overtaking the US economy by 2075.
While US tariffs create immediate economic pain, they may accelerate India's shift toward self-sufficiency and innovation. India faces the challenge of balancing its Western and Russian partnerships, but resilient trade policies and ambitious government initiatives position it to emerge stronger. With global projections placing India as the world’s second-largest economy by 2075, the current friction may ultimately craft a more independent and robust Indian economy.
