India and the United States, two of the world’s most influential economies, are facing a fresh phase of trade-related friction. Government sources in New Delhi, however, have assured that talks and efforts are actively underway to resolve the issue, describing it as a temporary challenge in an otherwise steady and long-term relationship between the two democracies.
The latest discord stems from Washington’s decision to impose an additional 25 per cent tariff on Indian goods, citing India’s purchase of Russian oil. The revised duty, which came into effect this week, has pushed overall tariffs on Indian exports to the US to almost 50 per cent, placing India alongside Brazil as the most heavily taxed exporters in the American market.
Tariff Burden on Indian Exports
According to official estimates, nearly two-thirds of India’s annual exports to the US, valued at over $60 billion, now fall under the higher tariff bracket. From consumer goods to industrial products, a large portion of shipments destined for American buyers are expected to feel the heat of the new duties.
The US Department of Homeland Security clarified that the higher rates will apply to all Indian consignments “entered for consumption or withdrawn from warehouse for consumption” after the new rule came into effect.
Despite the headline numbers, Indian government officials have tried to calm nerves among exporters. They maintain that the overall impact of the tariffs may not be as damaging as it appears. This is because India’s export basket is spread across multiple global markets, reducing the country’s dependence on any single destination.
India’s Firm Response
Back in New Delhi, policymakers have underlined that India will not yield under pressure. Prime Minister Narendra Modi has reportedly conveyed that the country’s farmers and domestic interests will not be compromised under any circumstances.
In fact, a report in German daily Frankfurter Allgemeine Zeitung (FAZ) claimed that PM Modi declined multiple calls from US President Donald Trump in recent weeks. The report described the move as both a reflection of the Prime Minister’s deep frustration over the tariff issue and his caution in handling sensitive negotiations.
This firm stance comes at a time when the government is balancing between protecting its domestic industries and avoiding any long-term strain in ties with Washington.
The US Perspective
On the American side, senior officials continue to emphasize the importance of the partnership with India, even while defending the decision on tariffs.
Speaking to Fox Business, US Treasury Secretary Scott Bessent acknowledged that India and the US share a “complicated relationship” but stressed that at the leadership level, ties remain strong.
“I do think India is the world’s largest democracy, the US is the world’s largest economy. At the end of the day, we will come together,” Bessent said. He also noted that President Trump and Prime Minister Modi enjoy a “very good rapport at the top level.”
At the same time, Bessent reiterated Washington’s concern over trade imbalances. He pointed out that the US runs a significant trade deficit with India, which puts New Delhi in a relatively weaker position during disputes.
“When there is a schism in trade relations, the deficit country is at an advantage. The surplus country should worry. The Indians are selling to us, they have very high tariffs, and we have a very large deficit with them,” he explained.
Navigating the Path Ahead
While both sides have made their positions clear, experts believe the situation is unlikely to spiral out of control. India and the US have faced multiple trade disagreements in the past but have usually managed to find common ground through talks.
Government insiders in New Delhi continue to stress that the dispute should be seen as a short-term disruption rather than a breakdown in ties. “The India-US relationship has always been deeper than individual issues. This is temporary and solutions are being worked out,” a source said.
Exporters, too, are adopting a wait-and-watch approach. Many believe that the resilience of India’s trade ecosystem, combined with its growing partnerships in Europe, Asia, and Africa, will cushion the immediate blow of American tariffs.
Broader Implications
For New Delhi, the bigger concern lies in how trade disputes intersect with strategic interests. The India-US relationship is not just about commerce; it spans defense, technology, clean energy, and global security. Analysts say both countries have far more to gain from cooperation than conflict.
Moreover, the geopolitical backdrop — from the war in Ukraine to global supply chain disruptions — makes coordination between large economies like India and the US more crucial than ever.