Trump reverses course on India with jacked-up tariff hitting this week

WASHINGTON – Just days ago, it appeared India and the U.S. government were on track to hold tariffs on Indian imports to 10% while the countries ironed out a trade agreement.

Today, however, President Trump announced a new 25% tariff on imports from India – effective Friday, Aug. 1. In a post of his Truth Social site, Trump also mentioned “an additional penalty,” although it is not clear whether that is a reference the 25% tariff or yet another levy on top of it.

The jacked-up tariff is being applied in retaliation for India purchasing oil and military equipment from Russia in the midst of Russian’s war on Ukraine.

Imports from India have carried an additional 10% tariff since Trump placed a temporary pause on the tariff hikes he announced in early April. He had set the original levy on goods from India at 26%.

India’s home textiles have a big stake in the U.S. market

The United States accounts for more than 59% of India’s home textiles exports, according to data from India Exim Bank. In 2024, the nation’s home textiles exports to the U.S. grew to $6 billion, up 2.5% from 2023.

The bank’s report was published in October 2024. At the time – which pre-dated the Trump Administration and its evolving tariff announcements – India Exim Bank projected that India’s home textiles exports to the U.S. would grow 8% to 10% in 2025.

So far this year, imports of terry towels from India have been healthy – up 7.4% in unit volume for the first five months of 2025, according to data from the U.S. Office of Textiles and Apparel (OTEXA). However, cotton sheet imports during the same were fell 5.6% on a unit basis, with Pakistan’s cotton sheet imports climbing 8.0%

India and the U.S. have been working on a Bilateral Trade Agreement since February and had set a goal of wrapping up a deal this fall. The New York Times described the state of negotiations as “murky,” noting that “the unpredictable role that Mr. Trump has played in other deals makes a possible resolution of the U.S.-Indian talks impossible to map.”