A few hours ago, Mr. Trump imposed additional tariffs on Indian goods. The total tariff now stands at 50%. This is among the highest levied on any trading partner.
Trump’s broader strategy aims to isolate Russia economically by penalising countries still trading with it.
However, behind the curtains, another reason for this tariff might be to stop India’s active participation in forums like BRICS, where discussions on alternative currencies or reduced dependency on the U.S. dollar are ongoing
Another concerning reason for Mr. Trump is the trade deficit.
U.S. goods exports to India- $41.5 billion
U.S. goods imports from India- $87.3 billion
Goods trade deficit – $45.8 billion
India’s total exports in FY 2024–25 reached around $821 billion, with U.S. shipments making up about $87 billion—roughly 10% of total exports. India’s U.S. exports represent around 2–3% of GDP.
This tariff can impact India’s GDP by 0.8%.
Interestingly, the USA themselves are importing goods from Russia.
From January to May 2025, U.S. imports stood at approximately $2.1 billion, including approx $600 million in enriched uranium and $500 million in palladium.
55% of total exports to the U.S. are affected by the recent duties- It will impact textiles, gems, seafood, chemicals, and machinery.
What next?
- With 55% of these now under heavy tariffs, India should shift focus to alternative markets like: EU, UAE, South East Asia & Africa
- Support textiles, gems, seafood, and machinery sectors—Offer export incentives, GST refunds, PLI schemes to stay price-competitive.
- To manage the trade deficit with the USA, India can offer reciprocal procurement deals in energy, defence, and aviation to balance trade.
This is a crucial test for India’s economic diplomacy.