Trade Tensions Mount As Trump Targets Indian Rice With Tariff Threat

US President Donald Trump has threatened new tariffs on India's rice exports, specifically accusing India of "dumping" cheap rice into the American market which hurts domestic farmers.  During a White House meeting on December 9, 2025, where Trump announced a $12 billion aid package for American farmers, local producers voiced concerns that cheaper rice imports from India, Vietnam, and Thailand were depressing domestic prices. Trump responded to these concerns by questioning why India has no additional duties and stating he would "take care" of the alleged dumping, implying that new tariffs could be imposed on Indian rice imports. The comments were made as a US delegation is expected to visit India on December 10-11, 2025, for ongoing bilateral trade negotiations, which have been struggling to make significant progress.

Trump's comments add to existing trade frictions and a general atmosphere of unpredictability.  The recent imposition of a total of 50% tariffs on most Indian goods have already created significant uncertainty, leading to a 28.5% drop in India's exports to the US within five months and impacting key labour-intensive sectors.  This uncertainty is now heightened by Trump's comments regarding new tariffs on Indian rice amid ongoing trade negotiations that are already delicately balanced. This rhetoric makes reaching even a "first tranche" of the deal more challenging.

The US has already imposed 50% tariffs on most Indian goods (implemented in August 2025 over other trade disputes and India's purchases of Russian oil). A new tariff on rice would further inflate costs and create a significant competitive disadvantage for Indian exporters compared to rivals like Pakistan, Thailand, and Vietnam. 

The US is not India's primary rice export market (West Asia is). India's basmati exports to the US were valued at over $337 million in FY 2024–25, representing less than 5% of its total global basmati exports. However, the move is a major concern for the specific sector and Indian American consumers. The potential new tariffs would further increase the price of Indian rice in the US market, making it less competitive compared to alternatives from countries like Pakistan, which faces a lower 19% tariff.

Donald Trump's explicit threat to impose new tariffs on Indian rice could become another sticking point that could further complicate and potentially stall the ongoing trade deal negotiations between the US and India. The US and India have been engaged in talks for a broader trade agreement, but disagreements over agricultural market access, including for rice and dairy products, have been a long-standing hurdle. Trump's public comments about "dumping" Indian rice and his intention to "take care" of the issue will increase the pressure by the US delegation on India during the talks.

The Indian Rice Exporters Federation (IREF) and other industry representatives argue that trade is based on demand and consumer preference, not price-based dumping. The IREF asserts that trade with the US is "anchored in consumer preference and cultural food patterns, rather than price competition". India exported around 2.34 lakh tonnes of rice to the US in the 2024 fiscal year, which is less than 5% of its total basmati exports globally, indicating the US is a niche market, not a dumping ground. The industry maintains it is "resilient and globally competitive" and not dependent on any single market.

However, the continuous threat of new tariffs creates market uncertainty and would lead US buyers to seek alternative suppliers, potentially causing a decline in India's basmati rice exports to the US. According to reports, the shares of Indian rice exporters like LT Foods, KRBL and GRM Overseas already came down by nearly 7% on Dec. 9 after Trump warned that he could impose additional tariffs on Indian rice.

India has previously sought strong safeguards and assurances within any trade agreement that no additional, unilateral tariffs would be imposed after the deal is finalized. The latest threats underscore India's need for such clauses, which the US has not guaranteed, making the finalization of the deal more complex. Trump's continuous "America First" trade policy, driven by a desire to reduce trade deficits and address geopolitical issues (such as India's oil trade with Russia), has led to a highly unpredictable environment for Indian exporters and policymakers. While high-level diplomatic talks continue, expectations for an immediate rollback of existing tariffs are low,

India has generally maintained a cautious but firm approach, focusing on diplomatic engagement, market diversification, and potentially utilizing the WTO dispute settlement mechanism, rather than immediate retaliation with tariffs of its own. India is seeking a broader trade arrangement that includes better access to the US market for its agricultural products like rice, spices, and marine goods which are a significant part of its exports. New tariffs on a key export item directly contradict India's objectives for a stable and fair-trade relationship.

Summing up, Donald Trump's recent indication that he may impose new tariffs on Indian rice has introduced fresh uncertainty and strain into India-US trade relations, significantly complicating the prospects of a bilateral trade deal. The potential tariffs on rice come on top of existing high duties and have dampened hopes for a swift resolution to ongoing trade negotiations. In essence, the possibility of new tariffs on Indian rice serves as a major setback. While both countries remain officially committed to the idea of a trade deal, the repeated use of tariffs as a bargaining chip by the US significantly lowers the prospects for a stable and predictable agreement in the near term. While high-level diplomatic talks continue, expectations for an immediate rollback of existing tariffs are low. Therefore, a breakthrough should not be expected in the immediate future, as the new tariff threats create a difficult environment for compromise.

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