Trump says US to impose 25% tariff on India from August 1

US President Donald Trump said on Wednesday the United States will impose a 25 per cent tariff on goods imported from India starting on August 1.

He said India, which has the world's fifth largest economy, will also face an unspecified penalty on August 1, but did not elaborate on the amount or what it was for.

"While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump wrote in a Truth Social post.

"They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD!"

India's commerce ministry, which is leading the trade negotiations with the United States, did not immediately respond to a request for comment.

Trump's decision dashes hopes of a limited trade agreement between the two countries, which had been under negotiation for several months.

US and Indian trade negotiators had held multiple rounds of discussions to resolve contentious issues, particularly over market access for American agricultural and dairy products.

Despite progress in some areas, Indian officials resisted opening the domestic market to imports of wheat, corn, rice and genetically modified soybeans, citing risks to the livelihood of millions of Indian farmers.

The new tariffs are expected to impact India’s goods exports to the US, estimated at around $87 billion in 2024, including labour-intensive products such as garments, pharmaceuticals, gems and jewellery, and petrochemicals.

The United States currently has a $45.7 billion trade deficit with India.

India now joins a growing list of countries facing higher tariffs under Trump’s "Liberation Day" trade policy, aimed at reshaping US trade relations by demanding greater reciprocity.

The White House had previously warned India about its high average applied tariffs — nearly 39 per cent on agricultural products, with rates climbing to 45 per cent on vegetable oils and around 50 per cent on apples and corn.

The setback comes despite earlier commitments by Prime Minister Narendra Modi and Trump to conclude the first phase of a trade deal by autumn 2025 and expand bilateral trade to $500 billion by 2030, up from $191 billion in 2024.

US manufacturing exports to India, valued at around $42 billion in 2024, as well as energy exports such as liquefied natural gas, crude oil, and coal, could also face retaliatory action if India chooses to respond in kind.

Indian officials have previously indicated that they view the US as a key strategic partner, particularly in counterbalancing China. But they have emphasised the need to preserve policy space on agriculture, data governance and state subsidies.