India has been thrust into the heart of America’s tariff battles, with President Donald Trump escalating his trade war in late August by imposing a sweeping 50% tariff on nearly all Indian exports to the United States. This unprecedented move comes after months of tense negotiations, broken deals, and failed expectations on both sides. According to the Associated Press and The Good Men Project, the White House executed a two-stage approach—first, a 25% reciprocal tariff was applied effective August 7, then a separate 25% penalty was imposed from August 27, explicitly tied to India’s continued purchases of Russian oil, making American tariffs on Indian goods the highest of any major trading partner.

Indian officials estimate these combined tariffs will impact $48.2 billion worth of exports, threatening job losses across sectors like textiles, gems and jewelry, leather goods, food, and automobiles. The pharmaceutical and electronics industries saw exemptions, providing some relief, but key labor-intensive exporters warn that the new duties make shipping to the US commercially unviable. Puran Dawar, Council for Leather Exports Chairman, calls the move “an absolute shock,” noting that both Indian businesses and American consumers will bear the brunt as higher prices ripple through supply chains.

New Delhi has protested that this “fee trade,” as economist Michael Ashley Schulman called it in an August interview, is a two-pronged maneuver—classic protectionism dressed as fairness and a geopolitical lever to punish India's strategic decisions. Trump himself justified the tariffs as restoring US manufacturing and fixing trade imbalances, but his administration swiftly tightened enforcement by adding hundreds of everyday items, giving importers and customs brokers almost no time to adapt. As a result, some supply chains are rerouting toward Mexico and Southeast Asia, away from India.

India’s negotiating stance turned defensive after last-minute failed deals, as reported by The Daily Star. Despite technical agreements and offers to reduce tariffs on US cars and alcohol and ramp up energy and defense imports, the US demanded more concessions. President Trump’s style—preferring headline-grabbing announcements—left Indian negotiators scrambling. Ultimately, India’s exports to the US hit $8.44 billion in January 2025, up sharply from $6 billion the prior year, but future growth is in serious jeopardy.

Perhaps most dramatically, President Trump is promising American voters a $2,000 “Tariff Dividend” payment, supposedly funded from new tariff revenue, even as legal challenges reach the US Supreme Court. The White House maintains its commitment to the India partnership, but the days of friendshoring have been replaced by “tariff-challenged” trade.

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