From Trump’s Tariff Push to Today: The Full Story of US–India Tariffs and What Changed
The tariff story between the United States and India did not begin suddenly. It evolved over years, shaped by politics, trade imbalances, geopolitics, and changing global supply chains. To understand where things stand today, it’s important to go back to when Donald Trump first put tariffs at the center of US trade policy—and how India adapted, resisted, and recalibrated.
The Beginning: Trump’s First Tariff Salvos
When Donald Trump first came to power, his core trade philosophy was simple: “America First” and reciprocal trade. The US believed that many countries, including India, enjoyed preferential access to American markets while maintaining higher tariffs on US goods.
At that time, the numbers told an uneven story:
-
Average US tariffs on Indian goods were low, typically between 2% and 4%
-
India’s average tariffs on US goods were much higher, often in the 10–15% range, and even higher in sectors like agriculture, dairy, and automobiles
Trump repeatedly called India a “tariff king”, arguing that US exporters were disadvantaged. This rhetoric marked the start of a shift—from cooperation to pressure.
Escalation Phase: Tariffs Become a Weapon
By the mid-2020s, tariffs stopped being just a negotiating tool and became a policy weapon. The US introduced the concept of reciprocal tariffs, meaning it would match or exceed the tariffs imposed by its trading partners.
In 2025, the US took a dramatic step:
-
A baseline 10% tariff was announced on imports from most countries
-
On top of this, India faced additional reciprocal tariffs, pushing effective rates much higher
At one stage, Indian exports to the US were hit with tariffs as high as 25–26%, a sharp jump from historical levels. Later in the escalation, additional penalties were added, and in some categories, the effective tariff burden touched nearly 50%.
This was unprecedented for a major US trading partner like India.
Why the US Went So Far
The tariff escalation was not only about trade deficits. It was also about:
-
Forcing supply chains to move closer to the US or allied countries
-
Reducing reliance on geopolitically sensitive regions
-
Pressuring countries on strategic issues, including energy sourcing
India’s continued purchase of discounted Russian oil became a flashpoint. While India viewed this as an economic necessity, the US framed it as a strategic concern. Tariffs became the pressure lever.
The Immediate Impact on Trade
Before the escalation, India exported around $85–90 billion worth of goods annually to the US, making America India’s largest export destination.
As tariffs surged:
-
Indian exporters faced severe margin pressure
-
Some shipments became unviable overnight
-
Trade volumes began to fall sharply in affected sectors
In certain periods, Indian exports to the US were estimated to drop by 30–40% year-on-year in vulnerable categories such as textiles, leather, gems and jewellery, and engineering goods.
India’s Response: Calm, Calculated, Strategic
India did not respond with an all-out tariff war.
Instead of mirroring US tariffs, India chose a measured strategy:
-
Avoided broad retaliatory tariffs that could hurt domestic consumers
-
Protected only sensitive sectors selectively
-
Focused on long-term competitiveness rather than short-term retaliation
India also accelerated policies that reduced dependence on exports alone:
-
Strengthened domestic manufacturing through incentives
-
Pushed production-linked schemes
-
Encouraged global companies to manufacture in India instead of exporting into India
This approach kept India from being isolated during a volatile period.
The Turning Point: Negotiations and Reset
By late 2025 and early 2026, it became clear that extreme tariffs were hurting both sides.
US companies faced higher input costs. Indian exporters were losing market access. Global supply chains were becoming unstable.
Negotiations intensified, and a reset began to take shape.
Under the new understanding:
-
The US agreed to roll back tariffs on Indian goods to around 18% on average, significantly lower than the peak levels
-
India agreed to reduce certain trade barriers and expand imports of US goods, particularly in energy and industrial sectors
-
Strategic commitments were made to rebalance trade over the long term rather than through sudden shocks
While 18% is still higher than historical norms, it represents a de-escalation from crisis levels and signals relative stability.
The Current Tariff Scenario: Where Things Stand Now
Today, the tariff relationship looks very different from the peak of the conflict.
From the US side:
-
Average tariffs on Indian goods are lower than the crisis highs, but higher than pre-Trump levels
-
Tariffs are more targeted and sector-specific
-
Policy emphasis has shifted from punishment to supply-chain realignment
From India’s side:
-
India has not dramatically raised tariffs on US goods
-
Sensitive sectors like agriculture remain protected
-
India continues to balance openness with domestic priorities
The relationship is now less confrontational and more transactional.
The Global Perspective: Why This Story Matters Beyond India and the US
This tariff saga reflects a larger global shift.
The world is moving away from:
-
Blind free trade
-
Lowest-cost sourcing at any risk
And moving toward:
-
Strategic trade
-
Trusted partners
-
Resilient supply chains
India benefited by positioning itself as:
-
A large, stable market
-
A neutral manufacturing alternative
-
A long-term partner rather than a short-term opportunist
The Big Lesson: Tariffs Are No Longer Just Economic
From Trump’s early rhetoric to today’s recalibrated approach, one lesson stands out:
Tariffs are now tools of geopolitics, not just trade.
Countries that respond emotionally lose ground. Countries that respond strategically gain leverage.
India’s restrained, long-term approach helped it absorb the shock, protect its economy, and emerge as a stronger player in global trade realignment.
Want to Understand More?
For deeper insights on:
-
Trade policy
-
Tariff impact on stocks and sectors
-
Global economic shifts explained practically
👉 Read more on StockTrack : StockTrack Home
👉 Connect with StockTrack on LinkedIn for regular market and policy insights
Because understanding policy today is key to investing and decision-making tomorrow.
