U.S. Tariffs on India Trigger Market Jitters Amid Trade Negotiations

On July 30, 2025, U.S. President Donald Trump announced an impending 25 per cent tariff on Indian exports, effective August 1, alongside unspecified penalties targeting India’s energy and defense procurements from Russia. The announcement stems from stalled India–U.S. trade negotiations—despite sustained bilateral trade valued at roughly USD 129 billion in 2024, with India enjoying a circa USD 46 billion surplus.

Markets reacted swiftly: Indian equity futures and export‑oriented sector indices tumbled as analysts warned of rising cost structures and disrupted supply chains. Investors noted that the tariff is marginally lower than the 26 per cent rate floated in April, though still materially impactful. Negotiating friction focused on agriculture and dairy concessions, arenas where New Delhi remains firm, raising concerns about escalation of trade friction.

Indian trade commentators lambasted the move as coercive “arm‑twisting”, especially in contrast with the balanced India‑UK pact. These tensions amplify volatility in investor sentiment, particularly among exporters, manufacturers, and allied service sectors. Corporate boardrooms are now revisiting revenue forecasts while portfolio strategists adjust exposure to sectors vulnerable to trade shocks. The standoff underscores the fragility of multilateral deal momentum despite parallel progress with other partners.