India Hit By 50% Tariffs: Where Do Trade Negotiations With US Stand?
Despite US' steep tariff hike on Indian goods, both countries are still aiming to finalise the first phase of a bilateral trade agreement by autumn 2025.
The United States has sharply raised tariffs on Indian goods, a move that has reignited tensions between the two countries even as they try to negotiate a bilateral trade deal. On Wednesday, Aug. 27, US President Donald Trump’s decision to impose an additional duty on a range of Indian imports came into force.
A punitive 25% tariff, linked to India’s continued purchases of Russian oil, was added to an earlier 25% duty already in place. As a result, total tariffs now reach as high as 50% on products from India, including garments, footwear, gems and jewellery, sporting goods, furniture and chemicals. These levels are among the highest Washington has imposed globally, comparable to rates applied to Brazil and China, reported Reuters.
The report stated that five rounds of negotiations had already taken place without success, with the US pushing India to reduce tariff levels to around 15%, similar to agreements struck with Japan, South Korea and the European Union. A government source told Reuters that the Centre hoped Washington would reconsider the additional 25% duty and that steps were being planned domestically to cushion the impact.
Negotiations and Contentious Issues
Talks for a bilateral trade agreement (BTA) began in March 2025, with both nations expressing the ambition of raising trade volumes to $500 billion by 2030. According to reports, a scheduled US delegation visit on Aug. 25 was postponed.
Sources familiar with the talks stressed that progress will depend on how each side responds to core sensitivities, a PTI report mentioned. “Ultimately, there are some red lines that we cannot overlook; the deal is dependent upon how each party addresses those red lines. For us, it has been clearly spelt out,” said external affairs minister S Jaishankar.
Protecting farmers, fishermen and small businesses remains India’s priority, while the US is pressing for tariff reductions on agricultural products. Prime Minister Narendra Modi recently reiterated this stance, saying he is “standing like a wall against any harmful policy related to the farmers, fishermen and cattle rearers of India,” according to PTI.
Diverging Priorities
US Treasury Secretary Scott Bessent acknowledged the strains in the relationship, telling Fox Business on Aug. 27 that ties between New Delhi and Washington are “very complicated” but added that he hoped “at the end of the day, we will come together.”
The US has sought lower tariffs on apples, corn, soybeans, almonds and ethanol, as well as greater market access for American dairy products. India has pushed back firmly, warning that such measures could harm the livelihoods of small and marginal farmers.
The Road Ahead
Despite the setbacks, both governments have indicated a willingness to finalise the first phase of the BTA by autumn 2025. The stakes are high, though. Bilateral trade stood at $131.8 billion in 2024-25 ($86.5 billion exports and USD $3 billion imports), with the US emerging as India’s largest trading partner in the April-July period of 2025-26, amounting to $12.56 billion, according to PTI.
