Trump’s tariff bomb? India may face 20-25% hit from August 1
India faces a possible tariff shock on August 1 as US plans to impose higher duties under Trump’s new trade policy. Here’s everything you need to know.
August 1 Tariff Deadline: Is India Running Out of Time?
The clock is ticking for India. August 1 marks the end of a crucial 90-day grace period extended by the US under President Donald Trump’s aggressive trade policy. If a breakthrough isn’t achieved in ongoing negotiations, Indian exporters may soon face a stiff tariff hike.
What's at stake?
A 10% universal tariff on all imports to the US, plus an additional “reciprocal tariff” of up to 26% for countries like India.
How Did We Get Here? A Quick Timeline
Let’s rewind and understand the key milestones that led to this moment:
- April 2: President Trump announces the "Liberation Day" tariffs – a 10% tariff across the board on all imports into the US.
- India targeted: Along with other nations, India was hit with an extra 26% “reciprocal” tariff.
- Grace period: The tariff hike for India was put on hold for 90 days.
- Extended again: Deadline pushed to August 1 to allow space for trade negotiations.
Stalled Trade Talks: What’s the Hold-Up?
Despite weeks of discussions, talks between the US and India have hit a wall. The major sticking points?
- Agriculture: India wants to protect its farmers.
- Dairy imports: US is pushing for more access.
- Genetically Modified Crops: India remains hesitant.
- Tariff phasing: US wants immediate removal, India prefers a gradual roll-out.
Trump’s stance: He's doubling down, pushing harder for faster concessions.
What's Next? Brace for a Bumpy Ride
With no agreement in sight, the deadline looms large. According to sources within India’s trade ministry:
- Tariffs may be implemented temporarily.
- A broader trade deal could still be finalized by September or October.
- India is preparing counter-measures and seeking to minimize impact.
“We’re hopeful, but we’re also ready,” said one senior official familiar with the talks.
Impact on Indian Exporters: What to Expect
If the tariffs kick in, here’s who might feel the pinch:
- Textile and garment industries
- Auto part manufacturers
- Agricultural exporters
- Pharmaceuticals
- Short-term impact: Possible drop in exports and rising costs.
- Long-term outlook: Dependent on whether a deal is reached before fall.
Conclusion: A Crucial Test for India-US Trade Relations
India’s trade diplomacy is being tested like never before. With President Trump sticking to his “America First” policy and India defending its own economic interests, this tariff standoff could redefine global trade equations in 2025.
Whether the two sides reach a deal or head into a tariff war, the next 72 hours will be critical. Watch this space.
