President Donald Trump has threatened to impose tariffs as high as 25% on imports from India if the two countries, along with allied nations, fail to finalize a long-sought trade agreement. The tariff threats are part of a broader U.S. strategy to address large and persistent trade deficits by imposing "reciprocal tariffs" on countries with which the U.S. has significant trade imbalances.
Trump declared a national emergency regarding the trade deficit in April 2025 under the International Emergency Economic Powers Act (IEEPA), implementing a baseline 10% tariff on almost all imports and planning higher tariffs on major trading partners, including India. India, termed a "tariff king" by Trump for its higher average tariff rates, has been negotiating to reduce tariffs and improve trade relations to avoid the steep U.S. tariffs. Despite ongoing negotiations and India’s willingness to lower certain tariffs, the threat of 25% tariffs remains if an agreement is not reached soon.
Experts suggest that the tariffs will have significant economic impact, with India's estimated exports to the U.S. potentially losing billions annually due to these measures. The U.S. aims to use these tariffs as leverage to push India into a trade deal that addresses tariff disparities and strengthens bilateral trade.
While there are expectations that a deal with India could be finalized soon, the 25% tariff threat underscores the high stakes and urgency in these negotiations as the U.S. enforces its aggressive trade policy stance in 2025.