India-US Trade tensions rise as tariffs near implementation

India’s Foreign Minister Subrahmanyam Jaishankar said on Saturday that talks with Washington are ongoing, but New Delhi will protect its key interests as steep US tariffs on Indian goods loom.

Starting August 27, Indian exports to the US will face additional duties of up to 50%—among the highest levied by Washington—over India’s rising imports of Russian oil. A 25% tariff has already been imposed, with a further 25% set to take effect this week.

A scheduled visit by US trade negotiators to New Delhi from August 25–29 was abruptly canceled, diminishing hopes that the new levies might be delayed or softened.

“We have some red lines in the negotiations, to be maintained and defended,” Jaishankar said at an Economic Times forum in New Delhi, stressing the need to protect Indian farmers and small producers.

Trade talks between the two countries had collapsed earlier this year, largely over US demands for greater access to India’s agricultural and dairy markets. Bilateral trade between the world’s largest and fifth-largest economies currently exceeds $190 billion.

“It is our right to make decisions in our national interest,” Jaishankar emphasized.

Analysts at Capital Economics warned that if the full tariff package is enforced, India’s GDP growth could slow by 0.8 percentage points in both 2025 and 2026. Longer-term, they noted, high tariffs may weaken India’s ambition to position itself as a global manufacturing hub.

Jaishankar also took aim at what he described as an unusual US approach to diplomacy under President Donald Trump. “We have not had a US president who conducts his foreign policy so publicly as the current one,” he said, adding that Washington’s focus on India’s oil trade with Russia overlooks larger buyers such as China and the European Union.

India, he noted, had not previously faced US objections to its Russian oil imports during earlier trade discussions, and he argued that Europe’s overall trade with Moscow dwarfs that of India.

In a gesture widely seen as an attempt to ease tensions, India this week suspended its 11% import duty on cotton until September 30, a move that could benefit American cotton growers while supporting India’s garment sector. That industry faces tariffs of nearly 60% on exports to the US once the new measures take full effect.

Tariffs on Indian goods were historically low—between 0–5% for most products, with some textiles facing 9–13%—before Washington raised duties in April. Earlier this month, Trump announced the latest round of penalties, doubling the effective tariff burden to 50%.