The United States government is getting ready to implement the 25% additional tariffs imposed on India by U.S. President Donald Trump, which come into effect on Wednesday. On Tuesday (August 26, 2025), the U.S. Department of Homeland Security (DHS) uploaded a notification of the new tariffs to be published in the official register the following day.
The Indian government is pushing a ‘Swadeshi’ mantra to reduce the economy’s reliance on exports, with Prime Minister Narendra Modi calling on Indians to be “vocal for local” and buy Indian goods on Tuesday. Indian exporters, however, are bracing themselves for a sharp fall in business to the U.S., with early estimates predicting that more than $47 billion worth of goods will face the 50% tariff rate. This includes the 25% tariff that Indian imports have attracted since August 7 plus an additional 25% tariff imposed as a penalty for India’s import of oil from Russia.
This additional tariff will not apply to iron, steel, or aluminium products; passenger vehicles such as sedans, sport utility vehicles, crossover utility vehicles, minivans, cargo vans, and light trucks; semi-finished copper, and intensive copper derivative products, among others.
The Ministry of External Affairs did not comment on whether India is planning any counter-measures or counter-tariffs against the U.S., though a senior official said that India stands by the MEA’s earlier statement calling the sanctions “unfair, unjustified and unreasonable”.
Higher tariffs
The U.S. DHS notification detailed the implementation of Mr. Trump’s executive order.
“To effectuate the President’s Executive Order 14329 of August 6, 2025… which imposed a specified rate of duty on imports of articles that are products of India, the Secretary of Homeland Security has determined that appropriate action is needed to modify the Harmonized Tariff Schedule of the United States (HTSUS) as set out in the Annex to this notice,” the notice said.
“The duties set out in the Annex to this document are effective with respect to products of India that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 27, 2025,” it added.
Foreign policy impact
The MEA did not comment on whether the additional tariffs will be on the agenda when Prime Minister Narendra Modi meets Chinese President Xi Jinping in Tianjin on August 30. Last week, the Chinese Ambassador to India had referred to the U.S. as a “bully”, saying the Chinese government opposes the tariffs and “firmly stands with India” on the issue.
“I think ahead of the meetings, it might be a bit forward of me to anticipate and say what will be discussed and will not be discussed in the meetings,” said Foreign Secretary Vikram Misri, who held a briefing on Mr. Modi’s upcoming travel to Japan (August 29 to 30) and China for the Shanghai Cooperation Organization summit (August 31 to September 1).
Responding to a question from The Hindu after the briefing, Mr. Misri said that Indian and U.S. officials “remain in touch”, indicating that the notification of the penalty tariffs on Tuesday had not come as a surprise, given that U.S. President Donald Trump had issued an executive order to place secondary sanctions on India on August 6.
Swadeshi mantra
The Indian government has begun encouraging Indian consumers to buy “Swadeshi” goods in a bid to reduce reliance on exports, with Mr. Modi and Commerce and Industry Minister Piyush Goyal among those highlighting this message.
Reserve Bank of India Governor Sanjay Malhotra, too, said the central bank “would not be found wanting” in supporting those sectors that will be adversely affected by the tariffs.
The Goods and Services Tax (GST) Council is all set to meet on September 3 to 4 to decide on a slew of rate cuts and rationalisation measures suggested by the Union government to not only ease the overall tax rate borne by consumers, but also simplify the indirect tax regime. This consumption boost is expected to mitigate some of the slowdown in economic growth that higher tariffs could cause.
Worried exporters
Indian exporter bodies and trade experts, however, are projecting a substantial hit to India’s exports.
According to the Federation of Indian Export Organisations president S.C. Ralhan, the development could “severely impact” India’s exports to the U.S., “with approximately 55% of India’s U.S.-bound shipments (worth $47-48 billion) now exposed to pricing disadvantages of 30% to 35%, rendering them uncompetitive in comparison to competitors from China, Vietnam, Cambodia, Philippines, and other Southeast and South Asian countries”.
According to the Global Trade Research Initiative (GTRI), the impact on India could be even worse. As per the think tank’s calculations, 66% of India’s exports to the U.S., worth $60.2 billion will face 50% tariffs, in sectors such as apparel, textiles, gems and jewellery, shrimp, carpets, and furniture. Another 30% ($27.6 billion) of India’s exports to the U.S. will remain duty-free, while 4% ($3.4 billion) will face a 25% tariff.
“Exports from these sectors [facing 50% tariffs] could plunge 70%, dropping to $18.6 billion, causing an overall 43% decline in shipments to the U.S. and endangering hundreds of thousands of jobs,” the GTRI warned in a note.
Published – August 26, 2025 09:24 am IST