By Admin • Wed Aug 27 2025
NEW DELHI / MUMBAI, Aug 27 — The United States has officially imposed a 50% tariff on Indian goods, marking one of the steepest trade actions in recent history. The move, announced earlier by President Donald Trump, comes on top of an additional 25% penalty slapped on India for continuing purchases of Russian oil and defense equipment.
The tariff places India among the most heavily targeted countries by Washington, threatening to disrupt exports from one of the world’s largest economies. Until recently, the US had been India’s biggest trading partner, making this sudden escalation a severe blow to growth and jobs.
Prime Minister Narendra Modi has attempted to cushion the shock by promising sweeping tax relief and urging citizens to embrace domestic products. Addressing crowds on Independence Day at Delhi’s Red Fort, wearing his trademark saffron turban, Modi encouraged small businesses and shopkeepers to display “Made in India” or “Swadeshi” boards outside their establishments.
“We must be self-reliant — not out of fear, but with pride,” Modi said, stressing that India should rise above global economic nationalism instead of being trapped by it.
His government has already announced a $12 billion income tax cut earlier this year, and now plans to overhaul the Goods and Services Tax (GST). The finance ministry is considering a simplified two-tier system that analysts say could free up around $20 billion for consumers and businesses. Investment firms such as Morgan Stanley and UBS believe these tax measures will help revive spending, boost GDP growth, and ease inflationary pressures.
Private consumption makes up nearly 60% of India’s GDP, but urban demand has been sluggish due to job cuts and lower wages. Modi’s fiscal stimulus, combined with strong rural spending and potential rate cuts by the central bank, could spur recovery in sectors like automobiles, garments, cement, and housing.
Despite trade tensions, India’s financial markets have shown resilience. Earlier this month, S&P Global upgraded India’s sovereign rating for the first time in 18 years — a boost that could reduce borrowing costs and attract more foreign investment.
Yet challenges remain. Growth has slowed compared to earlier highs, while geopolitical frictions with Washington over Russia have deepened. The imposition of a 50% tariff — seen by some experts as a de facto sanction — risks further straining ties between two major economies once seen as strategic allies in the Indo-Pacific.