New Delhi: Starting on 27 August, India is subject to a 50 per cent tariff on its exported goods to the US. Amid escalating trade hostilities with New Delhi through punitive tariffs, US President Donald Trump has once again stoked controversy by reviving his claim of acting as the key mediator in defusing tensions between India and Pakistan.
The developments come at a delicate juncture for the two strategic partners, whose relationship had been steadily warming in recent years but now faces the risk of unravelling under the weight of political claims and economic pressures.
Trump, speaking at a public forum, claimed that he personally intervened between the two nuclear-armed neighbours following a military confrontation in May, suggesting that his pressure on Prime Minister Narendra Modi forced India into a ceasefire with Pakistan.
“I am talking to a very terrific man, Prime Minister of India, Narendra Modi. I said, ‘What’s going on with you and Pakistan? The hatred was tremendous,’” he recalled. The American leader further alleged that he had used trade threats as leverage. “I said, I don’t want to make a trade deal with you…We’re going to put tariffs on you that are so high, your head’s going to spin,” he said, claiming a peace deal was reached “within about five hours.”
India, however, has firmly dismissed these assertions, reiterating that the cessation of hostilities was achieved through direct communication between the Directors General of Military Operations (DGMOs) of both militaries.
For New Delhi, Trump’s narrative is not only inaccurate but also undermines India’s diplomatic agency in managing regional security.
Tariffs Escalate to 50 Per Cent
Even as Trump repeated his mediation claims, his administration followed through on doubling tariffs on Indian goods to as high as 50 per cent.
The punitive measures, which took effect on 27 August, are tied to India’s continued purchase of Russian oil, a decision Washington views as undermining efforts to choke Moscow’s energy revenues amid the Ukraine conflict.
Trump had initially imposed a 25 per cent tariff, but his escalation has now pushed India into the ranks of countries facing the harshest US duties, on par with Brazil and China.
The tariffs cover a wide range of products, including garments, gems and jewellery, footwear, sporting goods, furniture and chemicals. While pharmaceuticals, electronics and petroleum products remain exempt, the impact is expected to be devastating for labour-intensive sectors.
In PM Modi’s home state of Gujarat, small exporters are bracing for severe job losses. Textiles and apparel manufacturers in Tiruppur, Noida and Surat have already halted production, citing a collapse in cost competitiveness, according to reports.
Additionally, reports highlighted that the seafood industry, too, faces a grim outlook, with nearly 40 per cent of Indian shrimp exports destined for the US now subject to prohibitive costs.
India exported goods worth $86 billion to the US in FY25, making America its largest trading partner. The new tariffs threaten almost half of this export basket, amounting to $48.2 billion in goods.
According to the Federation of Indian Export Organisations (FIEO), many smaller manufacturers are left with no choice but to shut operations or search for alternative markets such as China, Latin America and the Middle East.
While commenting on this situation, Deepak Gupta, Co-Founder, Style Lounge, told APAC Media: “Tough times have always brought out the best in India. These tariffs may test us, but they will also push us to think bigger, innovate faster and stand together stronger. This moment, though steeped in disruption, will spark fresh creativity, deeper collaboration and renewed ambition. While these trade barriers impact our cost structures, they accelerate our industry’s transition toward domestic self-reliance. We must transform these disruptions into catalysts for homegrown technological advancement and new partnership models.”
Amid the escalating trade tension, Aam Aadmi Party (AAP) Rajya Sabha MP and Founder-Chancellor of Lovely Professional University (LPU), Dr. Ashok Kumar Mittal said: “While the US and their European allies continue to purchase oil from Russia, India is being unfairly targeted for putting its own national interests first. LPU, one of India’s largest private universities with 40,000 students, has enforced the boycott (sale of all American soft drink brands across the LPU campus) immediately, and I am proud to see tremendous support for this cause from across the country!”
Strains in a Strategic Partnership
The escalation of Trump’s 50 per cent tariff on Indian goods is tied not only to trade disputes but also to geopolitics, particularly India’s tensions with Pakistan and its continued purchase of Russian oil. Trump has openly claimed that he is casting economic pressure as a tool for regional diplomacy.
At the same time, Washington views India’s Russian oil imports as undermining sanctions on Moscow, making them a central trigger for the tariff hike. Together, these factors have sharpened US-India trade frictions, with tariffs serving as both punishment for Russian oil purchases and leverage in South Asia’s fragile security landscape.
The irony is that India’s purchases of Russian oil, now the central grievance for Washington, were once quietly encouraged by US policymakers to prevent global prices from spiralling. Eric Garcetti, the US ambassador to India under President Joe Biden, openly acknowledged last year that “it was actually the design of the policy” to keep oil affordable.
That context makes Trump’s punitive measures all the more contentious, particularly as they are framed not only as economic pressure but also as a bargaining chip in his self-styled role as global dealmaker. “Now maybe it starts again. I don’t know. I don’t think so, but I’ll stop it if it does. We can’t let these things happen,” Trump said, hinting at his willingness to re-engage if tensions between India and Pakistan flare up once more.
For New Delhi, the stakes are clear. While the US remains its most important trading partner, India cannot afford to appear capitulating to unilateral demands. The Centre is preparing a multi-pronged strategy to mitigate the tariff shock, including financial aid for exporters and pushing diversification into alternative markets.
PM Modi, a day before the 50 per cent tariff kicked in, pushed for ‘Swadeshi Goods’. He emphasised that “swadeshi” should be the guiding principle, stating that production must be Indian regardless of the source of investment.
He said, “India has made self-reliance the foundation of building a developed nation. This is possible only through the strength of our farmers, fishermen, livestock rearers and entrepreneurs.”
Amid the tension about what will happen to the sectors majorly going to be majorly affected by the Trump tariff, PM Modi voiced his assurance by stating that his government will continue to protect the interests of small-scale entrepreneurs, farmers, shopkeepers and livestock rearers. “From Ahmedabad’s soil, I want to affirm that the welfare of small entrepreneurs and farmers is of utmost importance to me. We won’t allow any harm to come to their interests,” he emphasised.
When Trump began his second term, APAC Media raised questions about the potential impact of his “America First” policy on US-India relations. Experts then expressed cautious optimism about the relationship, anticipating challenges related to tariffs. Initially, there was hope for negotiated resolutions to minimise economic impacts among politicians and industry alike. However, the prospect of significant tariffs is raising severe concerns across the country.