INDIA HITS BACK AT TRUMP’S TARIFFS 31,500 crores CONTRACT CANCELLED

The trade relations between India and the United States have hit a turbulent phase after a fresh wave of tariffs announced by US President Donald Trump. What began as a 25 percent duty on Indian goods exported to the US, effective from Thursday, August 7, has now doubled in impact. In a sudden and surprising move on Wednesday, August 6, President Trump declared that an additional 25 percent tariff would be imposed on the same goods. With this back-to-back announcement, the total tax burden on Indian exports to the US effectively stands at a steep 50 percent.

This escalation has sent shockwaves across political and economic circles in India. Industry experts warn that such high tariffs could significantly dent export revenues, disrupt supply chains, and undermine long-standing business partnerships. Political parties have also been quick to voice their displeasure, criticizing the US administration for what they describe as an aggressive and unfair trade tactic.

The Context Behind the Tariffs

The US has often accused certain trade partners, including India, of maintaining unfair barriers to American products. Over the past few years, Washington has been pushing for a more “balanced” trade relationship, claiming that the current trade deficit with India disadvantages American businesses. While India has taken steps to ease certain import restrictions, it has not fully opened up sensitive sectors such as agriculture, medical devices, and e-commerce to US companies  a point of contention for the Trump administration.

These recent tariffs are believed to be part of Trump’s broader “America First” trade agenda, aimed at pressuring countries to renegotiate trade terms on conditions more favorable to the US. However, such measures have often backfired by triggering retaliatory actions and straining diplomatic relations.

India’s Response: Standing Firm

The Narendra Modi government has made it clear that it will not yield to these tariff pressures. Sources within the Ministry of Commerce and Industry have indicated that India views the US move as a violation of the spirit of mutual cooperation and respect in trade relations.

In fact, the government’s latest decision has taken many by surprise and reportedly delivered a strong counter to Washington. While details of this countermeasure are still emerging, it is understood that India has identified a set of US goods that could face higher import duties in retaliation. Items such as almonds, apples, walnuts, and certain industrial products significant US exports to India are likely to be on the list.

Economic Implications for Both Nations

The tariff war is not a one-sided affair. While Indian exporters may face reduced competitiveness in the US market, American businesses that rely on Indian products could also suffer from increased costs. Key sectors that could feel the pinch include textiles, pharmaceuticals, engineering goods, and IT services.

For India, a 50 percent tariff could particularly hurt small and medium enterprises (SMEs) that depend heavily on exports to sustain operations. Many of these companies operate on thin margins and may struggle to absorb the additional cost or pass it on to US buyers.

On the US side, importers of Indian goods will either have to bear the higher prices themselves or transfer the cost to consumers, potentially leading to inflationary pressures in certain product categories.

Political Fallout and Diplomatic Path Ahead

This development comes at a delicate time in US–India relations, which have otherwise seen significant cooperation in defense, energy, and technology. Political analysts believe that if the situation is not resolved quickly, it could overshadow other aspects of the bilateral relationship.

Indian opposition parties have seized on the opportunity to question the Modi government’s ability to safeguard national economic interests. At the same time, US domestic critics of Trump’s trade policies argue that such aggressive tariff measures alienate allies and undermine America’s strategic position in Asia.

However, history shows that trade disputes between India and the US are rarely permanent. Both sides have a shared interest in maintaining robust economic ties, and high-level diplomatic talks are expected in the coming weeks to find a mutually acceptable resolution.

The Road Ahead

For now, the imposition of a total 50 percent tariff is a stark reminder of how quickly global trade dynamics can shift. Businesses on both sides are bracing for disruption, while policymakers weigh the costs and benefits of hardline trade tactics.

If both nations can engage in constructive dialogue, this standoff could eventually lead to more balanced trade arrangements. But until then, the world will be watching to see how two of the largest democracies navigate this latest test of their economic partnership.