NextFin news, On Tuesday, August 26, 2025, in Mumbai, the Indian rupee slipped to around 87.75 per US dollar after the United States confirmed it would impose an additional 25% tariff on Indian-origin goods starting Wednesday, August 27, 2025. This move by Washington is a punitive measure in response to India's increased purchases of Russian oil earlier this month.
The US Department of Homeland Security issued a notification stating that the new tariffs would apply to goods entering the US for consumption or withdrawn from warehouses for consumption from 12:01 am EDT on Wednesday, August 27, or 9:31 am IST. Exceptions include in-transit shipments with proper certification, humanitarian aid, and items covered under reciprocal trade programs.
The tariffs could reach up to 50% on some Indian exports, among the highest levies imposed by the US, significantly impacting India's $87 billion merchandise exports to the US. Exporters estimate that nearly 55% of these exports could be affected, potentially benefiting competing exporters from countries like Vietnam, Bangladesh, and China.
A Commerce Ministry official in India, speaking anonymously, said the government has no expectation of immediate relief or delay in the US tariffs. The official added that exporters hit by the tariffs would receive financial assistance and be encouraged to diversify markets to China, Latin America, and the Middle East. The government has identified nearly 50 countries for increasing Indian exports, particularly in textiles, processed food items, leather goods, and marine products.
Indian Prime Minister Narendra Modi has stated that the interests of the country's farmers will not be compromised despite the tariffs. Modi is also preparing for a visit to China at the end of the month to improve bilateral ties.
Indian exporters have reported that US customers have already stopped placing new orders, and with the additional tariffs, exports could decline by 20-30% starting September. Pankaj Chadha, president of the Engineering Exports Promotion Council, highlighted the potential export downturn and noted government promises of financial support for affected exporters.
The benchmark equity indexes NSEI and BSESN in Mumbai were trading 0.8% lower on Tuesday amid the currency and trade tensions.
These developments come amid ongoing geopolitical tensions related to Russia's military incursion into Ukraine, with the US targeting countries indirectly supporting Russia through trade.
Sources: Reuters, FXStreet, The News International
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