DUTY DUEL

The US has slapped steep tariffs on Indian goods, India fumes but plays cool. Is a compromise still possible?

- By Ashish Sinha

THE LATEST flashpoint in US-India relations has arrived with all the subtlety of a freight train. On July 31, 2025, US President Donald Trump confirmed a 25 per cent tariff on all Indian imports, effective August 7, and hinted at an additional "penalty tariff" over India's ongoing oil and defence dealings with Russia.

Turning up the heat before US trade negotiators land in India on August 25, President Donald Trump on August 7 further hiked tariffs on Indian goods to 50 per cent, while allowing a 21-day grace period before the extra 25 per cent levy takes effect.

Washington's move comes after months of wrangling, a temporary pause in April, and five rounds of trade talks that were supposed to deliver a breakthrough. Instead, they've produced a diplomatic stalemate, a big bill for exporters, and a fresh headache for policymakers in Delhi. Now here's the kicker: India's new 25 per cent rate is significantly higher than the tariffs the US has just inked with other Asian economies - 20 per cent for Vietnam, 19 per cent for Indonesia, and 15 per cent for Japan. That means the world's fifth-largest economy suddenly finds itself at a competitive disadvantage in sectors from textiles to auto parts. For a country that shipped nearly a quarter of its exports to the US last year, that stings.

If you ask seasoned watchers, this isn't only about soybeans or shirts. Analysts like Amnish Aggarwal of PL Capital reckon the roots run deeper geopolitics, defence dependencies, and a refusal to "play ball" with Washington's strategic asks. The US, they note, has been irked by India's reluctance to credit American mediation in the recent ceasefire with Pakistan, its steady appetite for discounted Russian crude (33-35 per cent of FY25 oil imports), and growing overtures within BRICS and a potential Russia-India-China alignment.