US-India trade tensions rise as 50% tariffs hit Indian exports

India is facing steep 50% tariffs on its exports to the United States, with half of those duties reportedly aimed at punishing India for purchasing Russian oil. The new US tariffs on India’s exports have put tremendous pressure on major industries such as textiles, jewellery, seafood, leather, and engineering goods—sectors that collectively employ millions of Indian workers. As the world’s largest democracy seeks to maintain its trade balance while managing energy needs, these US-India trade tensions have become one of the most closely watched global economic developments.

US President Donald Trump said this week that he spoke with Prime Minister Narendra Modi primarily about trade. During the discussion, Modi reportedly assured Trump that India would reduce its oil imports from Russia. The statement came shortly after the United States imposed fresh sanctions on Russia’s top oil producers, forcing Indian refiners—key buyers of discounted Russian oil—to announce significant cuts in imports. The move could potentially remove one of the biggest roadblocks to a long-anticipated US-India trade deal.

The US-India trade dispute has intensified over energy, agriculture, and market access. Currently, India’s exports face 50% tariffs to the US, but Washington is considering reducing the rate to around 15–16%, provided India agrees to key concessions on energy and agricultural imports. The US tariffs on India’s exports are not just economic measures—they are political tools designed to pressure New Delhi into adjusting its oil trade policy and opening its markets to American goods.

One of the main sticking points in the US-India trade negotiations involves agricultural commodities such as corn and soybeans. The United States, which produces large volumes of genetically modified (GM) crops, has been urging India to open its market for corn imports. India, however, restricts ethanol production from imported grains and prohibits GM food crops. Washington argues that corn exports to India would be used only for ethanol blending and not for food consumption, while India remains cautious about compromising its domestic regulations and farmers’ interests.

The US-India trade conflict has also drawn attention to soybeans and soymeal. Due to tariff disputes between Washington and Beijing, US soybeans have become too costly for China, leaving American farmers with massive surpluses. To support its agricultural sector, the Trump administration wants India to import US soybeans and soymeal, especially since India has the world’s largest cattle population and a rising demand for animal feed. However, India’s soybean producers have strongly opposed these imports, saying that such measures would harm local oilseed farmers and destabilize domestic prices.

Despite US pressure, India has resisted allowing corn, soybeans, and dairy imports, citing the need to safeguard small farmers’ livelihoods. Trade experts believe New Delhi could consider limited imports of certain products, but any large-scale concessions may provoke political backlash. With assembly elections approaching in Bihar—one of India’s largest corn-producing states—opening the market to US corn imports could alienate rural voters, making the situation politically sensitive.

Meanwhile, India’s ethanol industry argues that importing corn from the US would disrupt the local supply chain. India has invested heavily in expanding ethanol capacity to promote energy self-reliance, and officials say current domestic production already exceeds demand. Accepting US corn imports could threaten this progress and undermine India’s long-term energy goals.

At the heart of the US-India trade tensions lies a complex mix of diplomacy, economics, and domestic politics. While India seeks to maintain access to affordable Russian oil and protect its local industries, the United States is determined to open new markets for its farmers and energy producers. The path to a US-India trade deal remains uncertain, but both sides appear eager to find a balance between cooperation and competition.

As India navigates the dual challenge of steep US tariffs on exports and growing global pressure over its Russian oil purchases, the coming months will be crucial in shaping the future of the US-India trade relationship—one that could redefine global trade dynamics for years to come.