Donald Trump’s renewed tariff offensive in his second administration has culminated in a high-stakes, three-front trade dispute targeting India, among America's major trading partners. This aggressive policy shift began in early 2025, when Trump used the International Emergency Economic Powers Act (IEEPA) to justify broad “reciprocal tariffs” intended to pressure countries with trade surpluses against the US.

For India, the US imposed a sweeping 27% reciprocal tariff on its exports, effective April 2, 2025, impacting up to 87% of Indian goods shipped to the American market—an annual value of $66 billion.

Trump’s push is part of a broader tariff escalation also aimed at the European Union, Canada, Mexico, Japan, and South Korea, but India has become a centrepiece of the dispute due to its relatively high tariffs (trade-weighted average of 12%) compared to America’s 2.2%, and the $45 billion trade deficit the US runs with India.

The sectors at greatest risk from these US tariffs include pharmaceuticals, automobiles, medical devices, textiles, and gems and jewellery—all export-intensive domains critical to India’s economic growth and job creation.

Especially exposed are the automotive sector, pharmaceuticals, and machinery, with analysts predicting India could lose up to $7 billion annually as a direct result of the tariffs. Pharmaceutical and auto exports, each worth $11 billion annually, are anticipated to be hit hardest.

In anticipation, India adjusted some of its own import duties—reducing tariffs on American whiskey and motorcycles, signalling a willingness to lower or eliminate tariffs on $23 billion of US imports. 

However, Indian negotiators have made clear that further concessions require a significant rollback of the US reciprocal tariff and relief on existing duties, particularly concerning steel and auto components. 

Talks have been fraught, with US policymakers demanding deeper cuts on Indian agricultural barriers, vehicles, and alcoholic beverages, while India staunchly defends its agricultural sector on both economic and food security grounds.

Events escalated through mid-2025. With the July 9 deadline for the new tariffs approaching, negotiations stalled over unresolved issues on auto parts, steel, and agricultural market access. The US has also threatened magnified sanctions—potentially as high as 500% tariffs—on countries, including India, that continue buying Russian oil, adding a strategic security layer to the economic standoff.

This multifaceted pressure campaign represents the three “fronts” of the Trump tariff war: escalating economic barriers, sectoral targeting, and the intertwining of commercial policy with US foreign policy and sanctions enforcement.

Despite the adversarial rhetoric, both sides expressed a mutual desire to avoid an all-out trade war. India, choosing diplomacy over retaliation, sought to negotiate concessions and even proposed a “zero-for-zero” tariff deal on auto parts to jump-start a broader agreement.

By July 2025, the two countries signalled some progress, with Trump asserting that the US and India were “very close to finalising” a deal, though key obstacles remained—particularly regarding tariffs on agricultural imports and steel. American officials reiterated that India could be among the first to secure a bespoke trade accord under the new tariff regime, reflecting both the intensity of the disputes and the strategic importance of US-India economic ties.

Trump’s three-front tariff war against India is reshaping bilateral ties: intensifying economic risks for vital Indian export sectors, straining ongoing trade negotiations, and integrating economic sanctions linked to wider US geopolitical interests.

Based On A NDTV Report