Washington: US President Donald Trump has warned that India may face tariffs of up to 25% on its exports to the United States if a bilateral trade deal is not finalised by August 1. The ultimatum comes amid ongoing negotiations, with Trump accusing India of maintaining disproportionately high tariff barriers against American goods.
Speaking at a press interaction in New Jersey, President Trump stated, “India has charged basically more tariffs than almost any other country. If we don’t get the deal done, we’re going to put tariffs of 20% to 25% on Indian products. We’ll have no choice.”
Despite calling India “a good friend,” Trump made it clear that his administration would not tolerate what he described as unequal trade practices. “They’ve taken advantage of our system for too long. Either we get a fair agreement, or we act decisively,” he said.
Markets React Cautiously
Trump’s remarks triggered an immediate reaction in financial markets. The Indian rupee fell to a four-month low, breaching the ₹87 mark against the U.S. dollar. Analysts attributed the decline to investor concerns over possible tariff hikes and the uncertainty surrounding the trade talks.
Traders also anticipate potential intervention by the Reserve Bank of India if the rupee continues to depreciate. Meanwhile, Indian equity markets remained under pressure, with exporters and manufacturing-linked stocks facing selling pressure.
Trade Tensions and Tariff History
Earlier this year, in April, President Trump had imposed 26% “reciprocal tariffs” on a range of Indian goods, citing unfair trade terms. However, a portion of those tariffs was later struck down by U.S. courts following legal challenges.
India’s average trade-weighted tariff currently hovers around 12%, significantly higher than the U.S. average of about 2.2%. The Trump administration has consistently pushed New Delhi to lower its duties on key American exports, including agricultural products, auto parts, electronics, and medical devices.
While India has expressed willingness to address some of these concerns, officials have resisted sweeping reductions, indicating that tariff decisions must align with domestic economic priorities.
India’s Position and Response
Indian government sources have said the country will not make further concessions before the August 1 deadline but remains committed to constructive dialogue. Negotiators are said to be working toward sealing a broader trade deal by September or October.
“There is an ongoing conversation. We are hopeful of reaching an understanding, but India will not respond to pressure tactics,” a senior Indian trade official said on condition of anonymity.
Trade analysts suggest that Trump’s remarks are intended to accelerate the pace of talks. “This is vintage Trump—deadline diplomacy. But India is unlikely to cave in under pressure,” said a senior analyst with the Centre for Global Trade Studies.
Potential Impacts
Should tariffs be implemented, several sectors of the Indian economy—particularly pharmaceuticals, automobiles, textiles, and IT services—could face significant disruptions. American companies reliant on Indian imports may also see increased costs and supply chain delays.
India is reportedly exploring both diplomatic and legal options in case the U.S. follows through with the tariff threat. However, government sources maintain that New Delhi’s preference is to resolve the matter through negotiation.
With only hours remaining until the deadline, both capitals are under pressure to reach a compromise that can avert a potential trade rift between two strategic partners.