US Imposes 27% Tariffs on Indian Goods Amid Ongoing Trade Agreement Talks

The United States has announced reciprocal tariffs on Indian goods entering American markets, effective April 9, 2025, reaching 27%. This measure impacts over 60 countries. Goods from India already face a 25% tariff on steel, aluminum, and auto products imposed earlier. Exemptions include pharmaceuticals, semiconductors, copper, and energy products like oil, gas, coal, and LNG. The US cites boosting domestic manufacturing and cutting its trade deficit as reasons for the tariffs. In 2023-24, the US had a trade deficit of $45.7 billion in goods with India. India's Ministry of Commerce is analyzing the impact. The Federation of Indian Export Organisations (FIEO) notes challenges but believes India's position is relatively favorable compared to competitors. Negotiations for a Bilateral Trade Agreement (BTA) between the US and India aim to increase bilateral trade. The US is pushing India to negotiate a large trade agreement while seeking to open the agriculture sector for American businesses. Both sides broadly come to an understanding on the next steps towards a mutually beneficial, multi-sector BTA, with the goal to finalize its first tranche by fall (August-September) 2025. From 2021-22 to 2023-24, the US was India's largest trading partner, accounting for about 18% of India's total goods exports. In 2023-24, India had a trade surplus of $35.32 billion in goods with the US. Key Indian exports to the US in 2024 included drug formulations and biologicals ($8.1 billion), and telecom instruments ($6.5 billion). Key imports included crude oil ($4.5 billion), and petroleum products ($3.6 billion).