Wednesday, July 30, 2025 - US President Donald Trump said in a post on social media on Wednesday that his administration will impose a 25% tariff on goods imported from India and an unspecified penalty on the country starting on August 1.
“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!”
Trump’s post came after he made similar statements earlier
this week indicating a higher tariff rate for India while a trade deal remains
elusive.
India’s rupee slumped to its lowest level in five months on
Wednesday after Trump’s statements on Tuesday that a trade deal with India has
yet to be finalised and that the country could face steeper tariffs.
“India has been a good
friend, but India has charged basically more tariffs, almost more than any
other country,” Trump told reporters aboard Air Force One, adding that would
come to an end.
That resulted in the
Indian currency posting its steepest one-day drop since May as it hit a low of
87.5125 against the US dollar before closing at 87.42. It was down 0.7% on the
day.
Traders said that
while the Reserve Bank of India likely stepped in to support the
local currency, the intervention was not very aggressive.
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.
India open to higher tariffs
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.
Indian officials said
New Delhi had offered tariff cuts on a wide range of goods and was working to
ease non-tariff barriers.
However, agriculture
and dairy remain “no-go” areas, with India unwilling to allow US imports of
genetically modified soybean or corn, or to open its dairy sector.
On Wednesday, Reuters
reported India is preparing to accept higher tariffs of 20%-25% on its exports
to the US in the absence of a trade deal. Indian officials are holding off on
offering fresh concessions ahead of Friday’s deadline.
Analysts say Trump’s
remarks on the India-Pakistan conflict have cast a shadow on trade
negotiations.
On Tuesday, Trump
reiterated his claim that he helped broker a ceasefire to a conflict between
India and Pakistan earlier this year, saying both sides accepted his request.
“That was great,” he
said describing his friendship with Prime Minister Narendra Modi. India
disputes Trump’s claims that he brokered the ceasefire.
India’s commerce
ministry, which is leading the trade negotiations with the United States, did
not immediately respond to a request for comment on Trump’s latest social media
post.
More tariffs coming
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.
On Monday Trump said
most partners that do not negotiate separate trade deals would soon
face tariffs of 15% to 20% on their exports to the United States,
well above the broad 10% tariff he imposed in April.
His administration
will notify some 200 countries soon of their new “world tariff” rate. The Trump
Administration has set an August 1 deadline to seal trade deals to prevent
higher tariffs.
The White House had
previously warned India about its high average applied tariffs — nearly 39% on
agricultural products, with rates climbing to 45% on vegetable oils and around
50% 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 counter-balancing China.
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.
Other pressures on the rupee
The Indian currency
has been suffering since Trump’s tariff frenzy began and has remained under
pressure as a trade deal between India and the US remains elusive.
Trump’s tariff threats, the psychological impact of the
rupee breaching the 87 mark, plus urgency among importers to hedge before the
August 1 deadline, has weighed on the rupee, said Dilip Parmar, a foreign
exchange analyst at HDFC Securities.
If conditions remain
the same, the rupee could fall below 88 in the coming weeks, Parmar said.
The local unit had hit an all-time low of 87.95 in February.
In addition
to trade uncertainty, persistent foreign portfolio outflows have also
been a pain point for the rupee. Overseas investors have net sold
over $1.5 billion of local stocks in July.
Caution among
importers and the absence of inflows have kept the currency under pressure
and that may persist in the near-term, a trader at a foreign bank said.
Meanwhile, Asian
currencies were trading mixed and the dollar index was little changed at 98.8
as investors await the Federal Reserve’s policy decision later in the day.
The Fed is widely
expected to keep rates unchanged, with the focus on commentary from Chair
Jerome Powell and whether the decision is unanimous.
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