Trump Tariff Live Updates: India-US hold informal talks, no plans to retaliate: Report

GTRI’s Ajay Srivastava has said that the 50% US tariff on India that has come into effect from today, will affect about two-thirds of India’s exports and around 30% of exports are exempt, which includes petroleum products, pharmaceuticals etc. About 4% of products, which is mainly half of India’s auto components exports, will face a 25% tariff. The remaining two-thirds he said, which include labour-intensive sectors, will face the full 50% tariff.

Mallikarjun Kharge slammed PM Modi over the new 50% US tariffs on India, which came into effect today. He said the tariffs could cause losses of around Rs 2.17 lakh crore across ten major sectors. ” Our Farmers, especially Cotton farmers, are badly hit. You had said you are ready to pay any “personal price” to protect them, but you have done absolutely nothing to soften the blow and protect their livelihoods,” Kharge added in his X post.

Citing a Financial Express report, he further added that the gems and jewellery sector may lose 150,000–200,000 jobs, with around 100,000 workers in diamond cutting and polishing in Saurashtra already affected since the 10% US tariff was introduced in April.

Kharge argued that Modi’s foreign policy has been too superficial, focused on appearances rather than securing real trade deals. “You failed in securing a Trade Deal. Now you are failing to protect our country,” Kharge said while concluding the post.

According to a new SBI report, US inflation is likely to remain above the 2% target until 2026. The rise in prices is mainly due to tariffs and changes in exchange rates. The report says that signs of increasing inflation are already visible, especially in sectors that rely heavily on imports, like electronics, automobiles, and consumer goods.

The US is India’s largest market for textiles, with India ranking as the third-largest exporter after China and Vietnam. Over the past five years, India has steadily increased its share in all three major textile categories, while China’s share has declined, showing India’s growing role in US supply chains.

However, the new US tariffs will make Indian textile products less competitive, giving an advantage to countries like China, Vietnam, Indonesia, and Japan, whose tariffs are lower (30% for China, 20% for Vietnam, 19% for Indonesia, and 15% for Japan).

Textiles and apparel are a key part of India’s economy, contributing 2.3% to GDP, 13% to industrial production, and 12% to exports. The sector is also the second-largest employer after agriculture, providing jobs to over 45 million people, many of whom are women and from rural areas. Nearly 80% of production comes from Micro, Small, and Medium Enterprises (MSMEs), highlighting the industry’s inclusive nature.

A senior economist at Natixis, Trinh Nguyen, said that the pressure from outside challenges could push India to speed up long-pending reforms. She pointed out that changes in land, labour, and liberalisation policies are key to boosting growth and making the country more competitive.

Ajay Srivastava, founder of GTRI think tank, says that this tariff hike is a “strategic shock” which not only risks mass unemployment in export hubs but also majorly impacts India’s foothold in US’ labour-intensive market. He added that the tariff hike can easily weaken India’s position globally.

There is often debate over who actually ends up paying tariffs. Let’s take a look at this from a conventional standpoint. If a Chinese pen costs 10 yuan or $1, and the US puts a 10% tariff on it, the price for an American buyer becomes $1.10. The extra 10 cents goes to the US government. This means tariffs raise prices in America and hurt the US consumer more than anyone else.

This idea assumes two things:

The Chinese seller or the US importer doesn’t lower their profits to keep prices stable, they just pass the extra cost to the buyer.

The exchange rate between the dollar and yuan doesn’t change. But in reality, exchange rates can shift depending on trade demand.

Here’s why this is tricky for the US:

Normally, exchange rates help balance out trade effects. But in the US, there is always high global demand for the dollar. Because of this, the usual logic of currency adjustments doesn’t always apply, making tariffs more complicated in America’s case.

Now look at it from another standpoint. Take the pen example again. If the US puts a 10% tariff and, at the same time, the Chinese yuan loses 10% value, then $1 can now buy 11 yuan instead of 10. The pen still costs 10 yuan to make, but now the American buyer pays the same $1 as before.

For the US buyer: Prices don’t go up.

For the US government: It still earns 10 cents from the tariff.

For trade: There is no drop in sales or inflation.

For China: The yuan’s fall means Chinese people need more money (11 yuan instead of 10) to buy $1 worth of goods from the US, so they lose purchasing power.

The first effect of tariffs is higher prices. This happens in two ways. Directly, consumers end up paying more for imported goods. Indirectly, prices of local substitutes also rise.

For example, if imported washing machines become expensive, local manufacturers quickly raise their own prices too, while keeping a small price edge. Even related products, like dryers, may get costlier as companies take advantage of the situation, knowing customers have fewer choices.

According to an explainer by The Indian Express, when Donald Trump took office on January 20 this year, US tariffs were about 2.5%. Since then, despite pauses and rollbacks, the effective tariff rate has jumped to 18.6%. This means that a basket of goods worth $100 from the global market, which earlier cost $102.5 after tariffs, would now cost $118.6.

But these numbers vary depending on how they are calculated. The Yale Budget Lab arrived at the 18.6% figure using tariff announcements. The Financial Times, however, calculated the actual tariff rate based on what is actually imported at a much lower 9.1%.

This gap creates another challenge. Importers may pay around $9.1 extra on every $100 of imports, but they might not pass the full cost to consumers. Fearing that higher prices could drive customers away, importers may absorb part of the additional expense themselves.

Goldman Sachs’ chief India economist, Santanu Sengupta, has cautioned that if the 50% tariff stays in place for long, India’s GDP growth could fall below 6%, compared to the earlier forecast of about 6.5%, a report by The Guardian said. Exporters from countries like Turkey and Thailand, who face much lower US tariffs, are already attracting American buyers by offering cheaper products.

Currently around 30% of India’s exports to the US- including pharmaceuticals, electronics, raw drug materials, and refined fuels- worth $27.6 billion, remain duty-free. But other sectors such as textiles, gems and jewellery and seafood, which depend heavily on the US market, are seeing fewer orders. Exporters fear that with tariffs at 50%, selling in America will become almost impossible.

The additional 25% tariff imposed by US President Donald Trump on Indian goods is expected to severely hurt West Bengal’s export-driven economy, a report by PTI said. Key sectors that are bracing for heavy losses just before the festive season kicks off include sectors like leather, engineering, and marine exports. Exporters have said that shipments and even production have been put on hold as businesses struggle with global tensions made worse by the new US tariffs.

Trade estimates suggest that Indian exports worth at least Rs 45,000 crore could be affected, with West Bengal among the worst-hit states. Labour-heavy industries are under extreme strain, and there are fears that Bengal’s marine exports, a major contributor to its annual trade, could collapse.

Harsh Shringla, Rajya Sabha MP and former Ambassador to the US, has stated that with 50% tariffs on India now in effect, the country is focusing on shifting its exports away from the American market and exploring opportunities in other regions.

Kirit Bhansali, Chairman of the Gems & Jewellery Export Promotion Council (GJEPC), told CNBC-TV18 that the industry cannot manage with a 50% tariff. Since 70% of jewellery exports come from Mumbai SEEPZ, he plans to meet the Chief Ministers of Gujarat, Maharashtra, and Uttar Pradesh to seek relief measures for workers in the sector.

As the 50% tariffs kicked-in for India today, Defence Minister Rajnath Singh said that India has never been a country to start wars or show aggression. But with today’s changing geopolitical situation, the country cannot ignore threats. He added that if challenged, India must respond firmly, which makes it necessary to keep strengthening defence preparedness. He stressed that training, modern technology, and regular dialogue with partners are crucial for this goal.

India-Us trade talks seem uncertain now amid the tariff hike and also after the American delegation postponed its planned August 25 visit to New Delhi. US Treasury Secretary Scott Bessent has accused India of making profits by reselling Russian oil, and experts believe the trade discussions are now in a fragile state. Analysts have caution that without direct talks between Prime Minister Modi and President Trump, the chances of reviving the deal are very low.

Aastha Gudwani, India Chief Economist at Barclays, told Reuters that nearly 70% of India’s exports to the US, worth around $55 billion, are now at high risk due to the steep 50% tariffs. She added that the trade relationship, once seen as friendly, has now soured into a strained partnership.

Rajeswari Sengupta, associate professor at the Indira Gandhi Institute of Development Research, suggested that India needs to shift toward a more trade-focused approach instead of relying on protectionist policies, reported Reuters. She said that free trade agreements with several countries, regional partnerships, and reducing tariffs and other trade barriers could help boost demand, support trade, and attract more foreign investment.

Radhika Rao, senior economist at DBS Bank, told Reuters that India’s exports to the US make up only about 2.3% of its GDP, but the fresh 25% tariffs that kicked in today, will affect different sectors unevenly. She noted that risks to growth could push the central bank to step in with support on credit and liquidity. At the same time, India may need to look for new markets and strengthen trade ties through both bilateral and multilateral deals.

NATO adviser Krystle Kaul has said the new US tariffs on India will hurt business ties and push back relations between the two countries that took decades to rebuild. “It’s going to impact businesses,” she said.

Here are the sectors that are exempt from the fresh tariffs:

– Auto and auto parts

– Iron/steel/aluminium

– Copper and its products

– Pharma

– Electronics (chip, mobile, tablet, PCBs)

Trump’s decision to double tariffs on Indian goods to 50% came into effect today. We present to you a full timeline which details how talks between the two countries broke down, turning hopes of a big trade deal into a major trade clash.

FEBRUARY: PM Narendra Modi agrees to work toward a limited trade deal with the US by fall 2025. Then both sides aimed to expand trade to $500 billion by 2030. The PM also promised to buy more U.S. energy.

MARCH: Trade Minister Piyush Goyal bsiited Washington for meetings with US officials. The US delegation later visited Delhi for talks and India had said that the talks were moving forward. But US trade report flagged issues with India’s high tariffs, data rules, and patents.

APRIL: US Vice President JD Vance visited India. Then, both countries agree on a framework for trade talks, post which the Indian officials also said that a deal may be signed before July 9.

MAY: Goyal and India’s lead negotiator Rajesh Agrawal travel to Washington.

JUNE: US Commerce Secretary said the progress was being made and a deal could soon be achieved. In fact, Trump had promised for a “big” trade deal. Indian officials, however, admitted that the talks stalled over farm goods. On June 20, PM Modi at a rally in Odisha said that he declined Trump’s invitation to Washington.

JULY: On July 4, Goyal said that India will not sign trade deals under pressure as national interest comes first. In mid-July, another round of talks in Washington failed to break the deadlock, PM Modi also told the Parliament that no world leader pressured India for a ceasefire with Pakistan, contrary to Trump’s earlier claims.

By July 31, Trump announced 25% tariffs on Indian imports and warned of another 25% if India kept buying Russian oil.

AUGUST: 25% tariffs on Indian goods take effect. PM Modi stated that India won’t sacrifice farmers’ interests even at a “heavy price.” Then New Delhi called US tariffs over Russian oil “unfair” and vowed to defend the country’s national interest. Also, PM Modi’s first China visit in seven years is announced.

US then cancelled its trade delegation trip to Delhi (Aug 25-29). White House said that India’s oil purchases are helping fund Russia’s war in Ukraine.

US’ 50% tariff hike on India has officially come into effect.

– About 66% of India’s exports to the US, which is worth $60.2 billion, will face new tariffs of 50% or more.

– Textiles and apparel exports which make up 35% of India’s share in the US market, will now be taxed at 63.9%. This will hit major production hubs like Tirupur, NCR, and Bengaluru, a PTI report said.

– Diamonds and jewellery worth $10 billion, hold a 40% market share in the US, and are facing high tariffs of 52.1%. This may threaten lakhs of jobs in Surat and Mumbai.

– Shrimp exports worth $2.4 billion, make up 32% of India’s share and are now facing a 60% tariff. This puts aquaculture hubs like Visakhapatnam at serious risk, the report added.

The new SBI report has warned that if all $45 billion worth of Indian exports face the 50% US tariff, India’s trade surplus with America could flip into a deficit in the worst case. However, it added that future trade talks could restore confidence and help improve exports to the US. The report also compared tariff levels with other countries, noting that Indian goods now face the steepest rate at 50%, while Chinese exports are taxed at 30%, Vietnamese at 20%, Indonesian at 19%, and Japanese at 15%.

A report by the SBI has said that the steep new US tariffs on Indian goods could hurt the American economy by adding to inflation and slowing growth. The study estimates that US GDP may fall by 40–50 basis points because of the tariffs, while input costs are also set to rise. The report also pointed out that early signs of higher inflation are already visible in the US, driven by the impact of tariffs and a weaker dollar.

With markets shut today for Ganesh Chaturthi, trading will resume on Thursday during Nifty’s monthly expiry, which could add to supply pressure. Rajesh Palviya, head of technical and derivatives research at Axis Securities, told News18 that market sentiment in India is currently weak. Vikram Kasat, head of advisory at PL Capital, said that investors should prepare for a longer adjustment period as tariffs are set to kick-in, bilateral talks might slow down, and in general, there’s no quick resolution to this as of now. He added that while a trade deal could roll back some tariffs, volatility and shifts in global supply chains may continue, becoming the new normal unless serious negotiations restart.

Ashwani Aggarwal of Ludhiana-based Nahar Industries said there is no clarity on future US orders because the 50% tariff is simply too steep. Exporters also face pressure in alternative markets, as buyers in Europe and elsewhere know Indian firms are struggling and are pushing for tougher deals.

India’s Chief Economic Advisor V. Anantha Nageswaran had earlier said that the impact of the new tariffs is likely to ease within the next one or two quarters. He added that while there may be short-term challenges, the long-term effect on India’s economy will not be very significant. At the same time, he urged the private sector to step up its role as the country continues to deal with larger structural issues.

“The private sector also has to think about the long-term rather than the next quarter, which is what might have led to many of the challenges we are currently beginning to face,” Nageswaran had told PTI.

Oil prices held steady on Wednesday after a sharp fall the previous day, as traders waited to see the impact of new US tariffs on India, which is the world’s third-largest crude buyer. Brent crude futures inched up by 2 cents to $67.24 a barrel, while West Texas Intermediate stayed flat at $63.25, a Reuters report said.

Washington will impose an extra 25% duty on Indian exports from 9:30 am IST, raising the total tariff rate to 50%. Trump has said that the decision was in response to India’s rising oil purchases from Russia, which offered cheaper supplies after Western sanctions.

US and Russian officials are said to be holding talks on new energy deals that could be used as incentives to push Moscow toward peace talks on Ukraine. This comes just weeks after Trump warned of an extra 25% tariff on India for buying Russian oil. The new duty, set to begin today, would raise the total tariffs on Indian goods to 50%. According to Reuters, the discussions also include the possibility of Exxon Mobil returning to Russia’s Sakhalin-1 oil and gas project.

The US Department of Homeland Security, in its notice on Tuesday, said that the new tariffs on India are a response to the threats posed by Russia to the US. The notification said the move follows a presidential order which declared it necessary to impose tariffs on India because the country is directly or indirectly importing Russian oil.