India faces harshest-ever US tariffs: What they mean for trade, jobs, growth

Dubai: The US will start enforcing tariffs of up to 50% on Indian goods from August 27, in one of the most severe trade measures Washington has taken against New Delhi. The move, announced by President Donald Trump, is aimed at punishing India for its continued purchases of Russian oil.

The tariff hike, confirmed by a U.S. Homeland Security notification, doubles the existing 25% duties already levied on Indian-origin goods. With India exporting $87 billion worth of goods to the U.S. in 2024, the decision is expected to hit trade, jobs, and economic growth in ways not seen since the pandemic.

Analysts at Nomura warn that 50% duties would be “akin to a trade embargo,” devastating profitability of smaller firms.

Washington has tied the tariffs directly to India’s surging imports of Russian crude oil. According to U.S. officials, Russia now supplies 42% of India’s oil imports, compared with less than 1% before the Ukraine war.

White House trade adviser Peter Navarro and Treasury Secretary Scott Bessent argue that India’s purchases give Moscow much-needed revenues to fund its war against Ukraine.

India rejects that charge. Foreign Minister Subrahmanyam Jaishankar has defended the oil imports as stabilising for global energy markets and pointed out that Western countries also buy refined products made in India from Russian crude. “Nobody forced you to buy it – but Europe buys, America buys,” he said earlier this month.

The U.S. is India’s top export destination, but the new tariffs disproportionately affect labour-intensive industries that rely heavily on the US market.

Exporters are already seeing cancelled orders and a shift in demand toward Vietnam, Bangladesh, Cambodia and other Asian rivals, with exporters already bracing for massive job cuts in the jewellery and diamond sectors. Mithileshwar Thakur of the Apparel Export Promotion Council noted that Indian apparel now faces a 30%-plus tariff disadvantage compared with competitors.

Economists say the trade shock could be significant.

That would mark India’s weakest performance since the pandemic, raising concerns over jobs and corporate earnings.

Officials in New Delhi acknowledge privately that there is “no hope for immediate relief or delay” in the tariff rollout. Instead, the government is preparing support measures, including:

Still, industry bodies caution that the scale of lost U.S. demand cannot be fully replaced in the short term.

Bilateral trade negotiations had once raised hopes that tariffs could be capped at 15%. But after five rounds of talks, those discussions appear to have broken down. U.S. negotiators even cancelled a late-August trip to India, fuelling doubts about progress.

Foreign Minister Jaishankar insists talks are not formally over, but the stalemate has already pushed Prime Minister Narendra Modi to seek closer ties elsewhere. He is set to visit China for the first time in seven years and has also deepened trade engagement with Russia.

Analysts say India is in a “no-win situation”. On one hand, the tariffs threaten to derail export-driven sectors, cost jobs, and weigh on growth. On the other, pushing back against Washington risks straining relations with India’s most important trading partner at a time of geopolitical uncertainty.

The dispute also underscores India’s precarious balancing act: securing affordable energy while navigating between its Western partners and its long-standing ties with Moscow.

For now, exporters, workers, and policymakers alike face the fallout of the steepest tariffs ever imposed on India—an inflection point for both trade and geopolitics.

- with inputs from Agencies