Trump’s 50% Tariff Strike On India Could Shake U.S.–India Business Ties
A sudden tariff escalation over Russian oil ties is forcing U.S. and Indian businesses into a high-stakes battle for stability and survival.
On August 1, 2025, President Donald Trump signed an executive order announcing a 25% tariff on India to penalize its purchase of Russian oil and resale on global markets. The move, intended to cut the U.S. trade deficit, has left U.S.–Indian small and mid-sized businesses scrambling for answers.
A sudden tariff on India threatens to disrupt imports to the U.S., impacting sectors critical to American competitiveness, including pharmaceuticals, textiles, electronics, and auto parts.
Trump justified the decision by accusing India of “financing” Russia’s war in Ukraine through petroleum sales, a charge that could have serious consequences for American consumers.
One week later, Trump announced an additional 25% tariff, bringing the total to 50%—among the highest rates for any U.S. trading partner. According to CNBC, this new levy will take effect at the end of August, while the first is already rippling through the economy.
India is not the only target. Trump’s order also directs the U.S. administration to evaluate other countries importing Russian oil, signaling his intent to further punish partners seen as fueling the conflict.
With tariff policies advancing rapidly, both India and the U.S. remain exposed, and concerns mount over what’s next for their business ties. This geopolitical escalation is risky and demands urgent attention as the measures begin to take effect.
Trade penalties are often used as political tools, but history shows they rarely achieve their goals. More often, tariffs act as hidden taxes, with businesses bearing the brunt.
For India—one of Asia’s largest suppliers—experts predict a GDP drop of as much as 40 points within a year if Trump’s policy remains. That would directly impact U.S. companies dependent on Indian exports, including Google, Apple, Tesla, and Costco. Unstable trade will constrain services, weaken demand, and disrupt markets.
A once-amicable partnership is deteriorating, with higher costs for Indian products leading to falling sales and reduced revenue for American firms. Businesses may also face an indirect rise in interest rates.
As global supply chains adjust, India must improve logistics, stabilize operations, and strengthen manufacturing. While these steps could restore its position as a top trade destination, critics warn this is a long-term challenge.
For U.S.–Indian partners, the new trade policy hampers growth. Costly imports create unpredictable operations, risking job losses and stalled objectives. Companies may be forced to pause operations, affecting broader U.S. infrastructure.
Turning away from a long-standing ally will undermine hard-won progress. If Trump continues this approach, the repercussions could extend far beyond the current crisis.
Still, despite the uncertainty, many U.S. companies have expressed continued commitment to India—though even strong ties are beginning to strain under the pressure.
While Trump’s regulations have raised concerns, U.S.–Indian entities are not alone in facing disruption. This moment also offers an opportunity to reshape the system rather than panic.
Trade penalties rarely deliver results. Instead, the U.S. and India should work together to accelerate negotiations on new trade and investment agreements, increase domestic production of goods traditionally imported, and diversify supply chains to reduce reliance on any single partner.
Both nations face a fragile trade structure.
As tariffs move forward, mutual agreement is essential to avoid long-term damage. Without collective action, successful companies—and the consumers they serve—will be left behind.
About the Author
Ankit Shrivastava is Managing Partner at Enventure, a private equity firm focused on growing U.S.-Indian family-run businesses through strategic succession planning and innovative sourcing. With over 20 years of experience, he specializes in space, sustainability, and healthcare investments