Athira Sethu
Kochi , 5 August 2025
India is experiencing new trade issues with America in 2025. The average tariff (import tax) the US imposes on Indian products has increased sharply, reports Fitch Ratings. In 2024, this tariff was a paltry 2.4%. But now in 2025, it has risen to 20.7%.
This significant hike occurred after American President Donald Trump imposed a fresh 25% tariff on products originating from India. Besides, the US slapped a “penalty” for the fact that India continues to import oil from Russia. The US and the European Union have requested nations to avoid trade with Russia due to the conflict in Ukraine. However, India has decided to remain non-aligned and carry on with its energy exchange with Russia.
These fresh tariffs began in the third quarter of 2025 and are already impacting India’s trade, particularly with the US, India’s largest export partner.
Fitch also noted that the US now has an average tariff rate of 17% on products from most countries. India is among the worst hit, followed by Brazil, Taiwan, and Switzerland. Even EU goods have lower tariffs, around 15%, which indicates that India is being penalized more.
Economic Impact on India
These tariffs are taking a toll on India’s economy. Large financial institutions are reducing their growth estimates of the country.
Goldman Sachs has reduced its 2025 GDP growth estimate for India to 6.5%, and 2026 to 6.4%. They explained that trade uncertainty is a significant contributor to this reduced growth.
HDFC Bank explained that the recent tariffs may lower India’s growth by 0.20% to 0.25% per annum.
