The fine print of the tariff order reveals that several sectors, including PVs, have been excluded by the latest tariff by the US government.
26 Aug 2025 | 1590 Views | By Sarthak Mahajan
The United States Department of Homeland Security has officially confirmed the implementation of a 50% tariff on Indian imports, set to take effect at 12:01 a.m. Eastern Daylight Time on August 27, 2025. According to the Federal Register notice published today, U.S. Customs and Border Protection will enforce Executive Order ...
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The United States Department of Homeland Security has officially confirmed the implementation of a 50% tariff on Indian imports, set to take effect at 12:01 a.m. Eastern Daylight Time on August 27, 2025. According to the Federal Register notice published today, U.S. Customs and Border Protection will enforce Executive Order 14329, titled "Addressing Threats to the United States by the Government of the Russian Federation," which imposes an additional 25% duty on top of the existing 25% baseline tariff announced earlier this month.
The notice, signed by Secretary of Homeland Security Kristi Noem, specifies that these duties will apply to all products of India entered for consumption or withdrawn from warehouse for consumption after the deadline. The only exceptions include goods already in transit that arrive before September 17, 2025, and certain categories such as pharmaceuticals, semiconductors, and humanitarian donations.
This unprecedented move places India at the highest tariff tier globally, surpassing even the rates applied to traditional adversaries. The Trump administration justified the action by citing India's continued purchases of Russian oil, with President Trump stating that India is "fueling Putin's war machine" through its energy imports. India currently sources approximately 40% of its oil imports from Russia, making it the second-largest buyer of Russian crude globally.
The tariff implementation will have far-reaching consequences across multiple industrial sectors, though some critical areas have been granted exemptions. The Federal Register notice provides specific details on affected and exempted categories:
Exempted Categories:
Most Vulnerable Sectors: According to UBS estimates, approximately $8 billion worth of Indian exports face immediate risk, with the following industries bearing the brunt:
The automotive sector, while receiving exemptions for finished vehicles and parts, may still face indirect impacts through supply chain disruptions. Indian auto component manufacturers who supply to U.S. assembly plants could see their competitiveness eroded if related materials or intermediate goods fall under the tariff regime.
Morgan Stanley projects that if the full 50% duty is applied across all eligible goods, the impact on India's GDP could reach 60 basis points, translating to approximately $23 billion at current exchange rates. The IT services sector, which represents about 9% of Indian equity market exposure to the U.S., remains unaffected as services are not covered under the current tariff structure.
The construction equipment sector, despite vehicle exemptions, faces uncertainty. While finished equipment may be protected, components and raw materials used in manufacturing could still be subject to the additional duties, potentially disrupting established supply chains between Indian manufacturers and U.S. construction companies.
The tariff implementation represents a seismic shift in U.S.-India relations, effectively dismantling what Carnegie Endowment's Evan Feigenbaum describes as "twenty-five years of painstakingly built" strategic partnership. This dramatic escalation has triggered what many analysts view as the most serious crisis in bilateral relations since the Cold War era.
India's Ministry of External Affairs has condemned the measures as "unfair, unjustified, and unreasonable," pointing to the hypocrisy of Washington's position. Indian officials note that the European Union maintained $78 billion in bilateral trade with Russia in 2024, while the U.S. continues importing uranium hexafluoride, palladium, and fertilizers from Russia. India has also highlighted that it has increased oil purchases from the U.S. by 120% over the past six months, demonstrating efforts to diversify its energy sources.
Prime Minister Modi declared that India "will never compromise on the interests of the country's farmers, fishermen, and livestock breeders."
Most significantly, the tariff war is accelerating an unexpected geopolitical realignment. According to experts, Trump's transactional approach "risks shattering a cornerstone of its Indo-Pacific strategy." The shared pressure from Washington is pushing India and China—traditional rivals with unresolved border disputes—toward a tactical rapprochement. Both nations now find themselves navigating what analysts describe as a "volatile and unpredictable Washington" that treats strategic partners and geopolitical rivals with equal disdain.
This shift is particularly evident in India's recent diplomatic overtures. Following Trump's announcement, Indian officials have engaged in unprecedented dialogue with Beijing. Russia's Kremlin spokesperson Dmitry Peskov defended India's sovereign right to choose trade partners, further solidifying the emerging alignment among nations facing U.S. economic pressure.
Adding insult to injury, Trump's simultaneous courting of Pakistan—offering a preferential 19% tariff rate and pledging joint oil exploration—has deepened Indian anxieties about Washington's commitment to the partnership. The contrast between Trump's "friend" rhetoric and punitive actions has not been lost on New Delhi's strategic community..