The United States has imposed tariffs of up to 50% on Indian goods, putting pressure on the Indian economy.

Tariffs loom, talks stall

Mumbai, August 23 (Xinhua) -- As the United States prepares to impose tariffs of up to 50% on all Indian goods, Indian Foreign Minister Subrahmanyam Jaishankar stated that negotiations with Washington are ongoing, but New Delhi must adhere to its "red lines." Speaking at the Economic Times forum in New Delhi, he stated, "We have set certain bottom lines in the negotiations that must be maintained and defended," and emphasized the interests of farmers and small producers.

The US measures primarily target India's increased purchases of Russian oil. A 25% tariff has already taken effect, with the remaining 25% set to kick in on August 27th. These will be among the highest tariffs the US has ever imposed on India. The US trade delegation's visit to India, originally scheduled for August 25th to 29th, has been canceled, dashing hopes of reducing or delaying the tariffs.

India refuses to compromise on agriculture

This isn't the first time India and the US have engaged in trade friction. Earlier this year, bilateral negotiations collapsed due to India's reluctance to open up its vast agricultural and dairy sectors. According to public data, bilateral trade between India and the US exceeds $190 billion (Source: Reuters, 2025), but agricultural issues have been the most challenging area for reconciliation. Jaishankar emphasized that India has the right to make decisions based on its "national interest."

The impact of high tariffs on the economy

Analysts at Capital Economics warned that if high US tariffs are fully implemented and remain in place for a long time, India's economic growth will be dragged down by 0.8 percentage points this year and next. The report also pointed out that in the long term, high tariffs could weaken India's competitiveness in the global manufacturing landscape and undermine its attractiveness as a "global manufacturing hub."

Diplomatic tensions and energy disputes

On the diplomatic front, Indian officials criticized the US for its "selective application" of concerns about its purchases of Russian oil. Jaishankar bluntly stated that other major buyers, such as China and the European Union, have not been subject to the same pressure, and that Europe's trade with Russia is far greater than India's. He also criticized US President Donald Trump's "unprecedentedly public foreign policy," arguing that this high-profile style is in stark contrast to the traditional pragmatic approach to international trade.

Investor Sentiment and Rational Judgment

Under the shadow of tariffs, market sentiment on India's economic outlook is divided. Some investors worry about the declining appeal of manufacturing and a potential slowdown in capital inflows; however, others believe that India, with its vast domestic demand and young population, still holds long-term growth potential. Rationally, while India's exports may face a short-term impact, if it can maintain its bottom line in negotiations and explore alternative markets, it may be able to gradually absorb external pressure. Investors are better off adopting a cautious wait-and-see approach and diversifying their investments, rather than becoming overly pessimistic due to a temporary conflict.

The India-US trade friction may be just one part of the changing global landscape, but it has far-reaching impacts on investment and the economy.

Want to be the first to grasp global market trends and investment opportunities? Follow us on BrokerHiveX for the latest in-depth analysis and real-time information!

Further reading

• SpaceX plans to achieve Starship reusability milestone with rocket's tenth flight test

• Ethereum hits a record high of $4870: Fed's dovish turn and ETF boom boost