India‑US tariffs warning surfaces as President Trump signals possible 20‑25% levy on Indian exports

US, July30,2025: The Indian rupee reacted swiftly, weakening to around ₹86.23 per U.S. dollar, its lowest level in four months, as investors feared tariff disruption and surged foreign outflow

India‑US tariffs warning – What triggered the alert

India‑US tariffs warning emerged when U.S. President Donald Trump, speaking onboard Air Force One, indicated that India may face 20% to 25% tariffs on its exports, citing New Delhi’s historically high import duties on U.S. goods.

This statement came just two days before Trump’s August 1, 2025 reciprocal tariff deadline—raising alarm among Indian officials and traders.

What Trump said on Air Force One

Trump reaffirmed that India is a “good friend”, yet stressed India has charged more tariffs on U.S. exports than nearly any other country. He declared that under his leadership, this imbalance “can’t continue”.

He clarified that no tariff decision is final, stating: “I think so” when asked if 20‑25% is likely—but emphasised negotiations are still underway.

India’s trade talks: deadlock & strategies

India and U.S. negotiators have completed five rounds of talks, but key sticking points remain—especially on agriculture, dairy, and genetically modified crops. India has resisted opening those sectors.

Commerce Minister Piyush Goyal, however, described the progress as “fantastic”, expressing confidence a broader trade deal could be concluded by September or October.

India is also preparing to receive a U.S. delegation in mid‑August to resume talks, aiming ultimately for long‑term preferential access and exemptions from steep retaliatory tariffs.

Likely economic impact & rupee reaction

The Indian rupee reacted swiftly, weakening to around ₹86.23 per U.S. dollar, its lowest level in four months, as investors feared tariff disruption and surged foreign outflows totaling over $1.5 billion in July.

Markets expect the Reserve Bank of India to intervene if the rupee weakens further, though any strong policy move is deemed unlikely amid uncertainty.

Insights from officials & analysts

Several Indian government sources suggest a temporary rate of 20‑25% could be imposed as an interim measure—but expect a rollback if a deal is reached before or after the deadline.

Analysts argue India’s exports—particularly gems, jewellery, and pharmaceuticals—would face major impact under 26% tariffs originally threatened in April.

India’s position is strategic: secure favourable terms rather than hastily lock in an interim deal that may compromise broader interests.

How reciprocal tariffs work

Under Trump’s “Liberation Day” tariffs policy, a universal 10% baseline tariff was announced on April 2, 2025. Countries with higher trade barriers toward the U.S. may face custom reciprocal rates, tailored individually.

These rates are based on existing duties, trade balances, and monetary barriers. India’s average tariffs hover around 12%, compared to the U.S. average of 2.2%, fueling Trump’s rationale.

Trade outlook: where negotiations stand

Despite approaching deadlines, no interim India‑U.S. deal seems imminent. Indian sources say finalising a comprehensive deal by October remains the goal—but agreements may be sectoral if broader talks stall.

Reuters noted India has yet to receive a formal tariff notice—unlike 20+ other countries—which some analysts view positively: signaling India remains central in Washington’s trade agenda.

Useful external resources

• U.S. Trade Representative updates on reciprocal tariff policy
• Reserve Bank of India notices & FX reports
• Indian Commerce Ministry: trade negotiation bulletins

At a glance

This India‑US tariffs warning marks a critical juncture: trade talks teeter under geopolitical pressure, while economic consequences loom large. As the August 1, 2025 deadline nears, careful preparation by exporters, strategists, and policymakers will be pivotal. Whether a tariff or a favorable deal emerges will shape the trajectory of India–U.S. trade relations in the years to come.