Listeners, welcome to India Tariff News and Tracker—a special update on the latest headlines and tariff developments between the US, President Trump, and India, recorded September 5, 2025.

The trade relationship between the United States and India has reached a new level of tension, with President Trump’s administration doubling down on tariffs targeting Indian exports. According to the latest KPMG report from September 2025, the US has sharply raised tariffs on Indian goods, increasing the rate from 25% to a staggering 50% as of August. This has delivered a significant blow to key Indian export sectors, particularly the country’s vital gems and jewelry industry, which relies heavily on American demand.

Former US officials and trade experts have voiced concerns that these tariff hikes—cumulative 50% levies on select Indian exports—risk not just the economic partnership but the broader strategic alliance between Washington and New Delhi. Jake Sullivan and Kurt Campbell, both well-known from the Joe Biden era, recently warned in Foreign Affairs that the “unprecedented discord” brought about by these tariffs could push India closer to China and Russia's strategic orbit, threatening longstanding bipartisan support for strong ties between the world’s two biggest democracies.

Behind the numbers, the motives are as contentious as the consequences. President Trump’s trade team defends the move as a push for “fair and reciprocal trade,” mainly justified by what Trump repeatedly calls a “one-sided” relationship in favor of India. But trade analysts, including those at The Wire, note that the White House is layering a 25% “fair and reciprocal” tariff on top of another 25% directly linked to India’s energy imports from Russia. This effectively weaponizes trade negotiations for broader geopolitical aims.

India, meanwhile, is under mounting pressure. An open letter from a coalition of major Indian civil society groups has labeled the latest US demands as “tariff blackmail.” The coalition warns that caving in could jeopardize India's autonomy over drug patent policy, digital data management, and the massive government procurement market. The US is also reportedly pressing India to limit its ties with Russia, Iran, and Venezuela—making this much more than a fight over tariffs alone.

Economically, the new tariffs are already being felt by American consumers and businesses as well. Analysis from Yale’s Budget Lab shows that, thanks to all 2025 tariffs including those on India, the average effective tariff rate in the US has shot up to 17.4%, the highest since the 1930s. This increases costs for imports and results in rising prices and lower purchasing power for US households.

Despite the turmoil, Indian authorities remain hopeful that this 50% tariff is a short-term tactic, not a permanent shift. India’s Chief Economic Advisor, V. Anantha Nageswaran, suggested this approach won’t be a “long-term positive” for either country and called for cooler heads to prevail.

In a cryptic social media post, President Trump himself acknowledged rising tensions, remarking that “China kills us with tariffs, India kills us with tariffs, Brazil kills us with tariffs,” suggesting dwindling hopes for an immediate trade deal with India.

Listeners, we’ll keep tracking these fast-moving developments and what they mean for India’s economy, trade policy, and global standing in the weeks ahead. Thanks for tuning in to India Tariff News and Tracker—don’t forget to subscribe for your weekly update.

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