India Singled Out In Trump’s Escalating Tariff crusade

A fresh round of US tariffs singles out India with 27% duties, reigniting tensions and leaving negotiations adrift amid growing trade friction.

By BasisPoint Groupthink

Groupthink is the House View of BasisPoint’s in-house columnists.

April 3, 2025 at 2:45 AM IST

Reciprocity is the new tariff mantra in Washington, and India is learning it the hard way. The Trump administration has slapped a 26% tariff on imports from India—higher than the rates for Europe, Japan or South Korea—marking a sharp escalation in its hardline trade posture. The new duties take effect in two stages, starting with a flat 10% across-the-board levy from April 5, with the country-specific tariff kicking in four days later.

India is the only major economy other than China to face a penalty of this magnitude. While steel, aluminium and pharmaceuticals have been spared this time, most other Indian goods entering the US will be hit with combined duties of 37%, factoring in the 10% base tariff and the 27% reciprocal charge. Unlike product-specific tariffs, these are designed to be country-wide and appear to also account for integrated goods and services tax and non-tariff barriers.

Trump framed the decision in familiar campaign-trail language, calling India “very, very tough” and accusing it of unfair treatment despite their close ties. He claimed India imposes a 52% charge—likely an inflated figure that includes peak tariffs and regulatory barriers. New Delhi, for its part, had attempted to head off the move with a package of concessions during Prime Minister Modi’s visit to Washington in February. Those efforts now appear to have made little impact.

More concerning is what lies ahead. There may be a diplomatic off-ramp. Secretary Scott Bessent described the reciprocal tariffs as a cap, suggesting that while the scale of the increases may appear steep, they are meant to serve as a starting point for nations to negotiate their way down. For now, though, India appears to be navigating a tightening loop of penalties with no clear path to reprieve.

For Indian businesses, this may open a Pandora’s box. If the US steps up verification and enforcement to ensure Indian origin, the burden of compliance could rise dramatically. The fallout may also extend to sectors currently exempt if the spat deepens or retaliatory actions follow.

India has long been in Washington’s crosshairs for its tariff regime. Trump’s latest move, driven as much by optics as economics, confirms that campaign-season diplomacy can have very real trade consequences.