In recent weeks, U.S.-India trade relations have shown signs of strain. Once considered a leading candidate for an early bilateral trade agreement, India will soon face a minimum 50% tariff, positioning it as one of the most heavily penalized countries under the reciprocal tariff framework.
Below outlines the recent executive order (EO), which codifies the increased duty on India.
ADDRESSING THREATS TO THE UNITED STATES BY THE GOVERNMENT OF THE RUSSIAN FEDERATION
(Executive Order, Fact Sheet)
On July 31, President Trump issued an EO to update the “reciprocal” tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which among other things established a 25% tariff on Indian goods beginning on Aug. 7—a modest decrease from the 27% tariff proposed on “Liberation Day.” However, President Trump later warned that India would be subject to the 25% “reciprocal” tariff as well as an additional “penalty” of 25%, citing concerns about the nation’s extensive trade barriers and purchase of Russian oil and military equipment. The president’s actions reflect a “secondary tariff” strategy designed to force U.S. trading partners to cut ties with U.S. adversaries.
This EO codifies the “penalty,” effectively doubling the tariff on India.
- Imposed Under IEEPA. In 2022, President Joe Biden invoked IEEPA to prohibit the United States from importing Russian energy resources or investing in the Russian energy sector to address the threat posed by Russia’s invasion of Ukraine. This EO maintains and expands the scope of the national emergency to address India’s direct or indirect importation of Russia oil.
- Increased Tariff. Indian goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on Aug. 26 will be subject to an additional 25% tariff.
- Stacking. The additional 25% duty imposed on Indian imports will apply in addition to any other duties, fees, taxes, exactions and charges applicable to such imports, including the 25% tariff announced on July 31. Thus, Indian goods will be subject to a minimum 50% tariff starting on Aug. 27.
- Exemptions. The following exemptions apply:
- Goods entered for consumption by Sept. 17. Indian goods that (1) were loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the United States before 12:01 a.m. EDT on Aug. 26; and (2) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on Sept. 17, 2025, will not be subject to the additional 25% duty.
- Steel, aluminum, autos, copper and other sectors subject to current or future Section 232 “sectoral” tariffs. This EO does not modify the existing exemptions for goods subject to current and future “sectoral” tariffs implemented under Section 232 of the Trade Expansion Act of 1962. These tariffs currently apply to steel, aluminum, autos and copper, with pharmaceuticals, lumber and semiconductors currently subject to Section 232 investigations, which are likely to result in the imposition of future tariffs.
- Annex II. The exemptions outlined in Annex II of the “Liberation Day” EO remain in effect. These are largely agricultural, pharmaceutical and industrial inputs.
The Aug. 27 implementation timeline will provide an opportunity for the United States and India to continue bilateral trade negotiations. Separately, President Trump has considered a similar “secondary tariff” strategy as part of his trade negotiations with China and other countries that purchase Russian oil.
