India Braces for Punishing U.S. Tariffs Aa Commencement Date Approaches
India is preparing for a major economic blow as the United States moves ahead with steep new tariffs on its exports, escalating a trade confrontation that threatens both economies and wider geopolitical ties.
Beginning Wednesday, Washington is set to impose an additional 25 percent levy on Indian-origin goods, effectively doubling existing duties to around 50 percent. The move, tied to India’s continued imports of Russian oil, marks one of the harshest trade penalties the U.S. has enacted against a key partner.
Exporters fear the impact will be immediate and severe. Analysts estimate that more than half of India’s $87 billion in annual shipments to the American market could be affected, with overall exports potentially dropping by as much as 30 percent from September.
Economists warn that the fallout could shave close to one percentage point off India’s yearly GDP growth, undermining momentum in one of the world’s fastest-growing economies.
The brunt of the damage is already being felt in Surat, India’s diamond-polishing hub, which supplies the majority of finished stones to the global market.
Tens of thousands of workers have been laid off in recent weeks, and industry leaders warn that as many as 100,000 more jobs are at risk if the tariffs remain in place.
Similar anxiety looms across textile, leather, and machinery exports that rely heavily on U.S. demand.
New Delhi, however, has signaled it will not back down. The government insists its energy and trade decisions are guided by strategic autonomy, not external pressure, and has flatly rejected U.S. demands to scale back Russian crude purchases.
Ministers have also ruled out concessions in sensitive sectors such as agriculture and dairy, arguing that India will not compromise on farmers’ livelihoods to placate Washington.
Some economists are urging India to hit back with reciprocal duties on U.S. products in order to avoid appearing vulnerable. At the same time, officials are weighing support measures for affected exporters and emphasizing the resilience of other industries, such as pharmaceuticals and IT services, that remain globally competitive.
The dispute is straining what had been a deepening U.S.-India partnership. The two countries have collaborated closely in recent years on defense, technology, and Indo-Pacific strategy. Now, analysts warn that the tariff war could undermine initiatives such as the Quad alliance, which also includes Japan and Australia, at a time when regional security cooperation is seen as crucial.
For Prime Minister Narendra Modi, the crisis represents a political and economic test. Balancing domestic priorities with global diplomacy, his government faces the challenge of absorbing short-term shocks while keeping long-term growth on track. For Washington, the gamble is whether punishing tariffs will shift Indian policy—or simply push New Delhi to double down on alternative alliances.
As the new duties take effect, the stakes extend far beyond trade balances. The coming weeks will reveal whether the confrontation can be contained through negotiation or whether it will deepen into a protracted standoff between two of the world’s largest democracies.
