Recently, United States President Donald Trump declared a 25 percent supplementary tariff on India, raising the overall tariff to 50 percent. President Trump's choice to increase the tariff, pointing to India's ongoing purchases of Russian oil, reflects more than just a trade obstacle. It indicates a transition toward deglobalization and the necessity for economic independence. It represents the convergence of energy safety, strategic independence, and economic self-determination in a multipolar landscape.

The crisis poses challenges for Indian exporters and US consumers while also advancing India's Aatmanirbhar Bharat vision and bolstering alternative governance structures via BRICS unity.  Let’s learn more about whether the US Tariff on India will be a catalyst for economic independence.

50 percent Tariff Structure

The US tariff system currently places an unmatched strain on Indian exports, establishing America as the top destination with the highest tariffs for Indian products worldwide. The White House statement defended the extra 25 percent tariff as a response to the national emergency caused by Russia's actions in Ukraine, specifically focusing on India's direct or indirect import of oil from the Russian Federation.

This penalty tariff, considered necessary and suitable by the executive order, starts on August 27, while the first 25 percent reciprocal duty declared on July 31 took effect on August 7. Trump has allowed 21 days before the new tariff takes effect, creating an opportunity for possible negotiations while keeping maximum pressure.

The financial implications are significant and multifaceted. Elevated tariffs directly result in higher expenses for exports, causing Indian products to be far less competitive in the US market.
 

Unilateral Coercive Measures

The BRICS group has denounced the US’s unilateral tariffs as unilateral coercive measures that could distort trade and violate WTO regulations at the BRICS Summit 2025. The coalition, now broadened to encompass 10 nations with more than 30 countries showing interest in membership, poses a significant challenge to the US-centered global trade framework and the established Western-led international system.

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Leaders of BRICS explicitly condemned unilateral economic sanctions and secondary sanctions, claiming these actions breach international law and inflict significant damage on human rights, including essential rights to development and health.

Move towards Deglobalization

The rapid move towards deglobalization, first driven by the US-China separation and now branching into India-US ties, indicates a significant reorganization of the worldwide economic system.

The US's increasing tariffs on India illustrate a larger shift toward protectionism and the rise of inward-focused development strategies in major economies, where post-Cold War globalization is progressively yielding to "sovereignty interdependence"—countries emphasizing domestic stability and strategic independence while still engaging globally in a selective manner.

The ongoing crisis sharply highlights how self-focused development strategies, initially created to safeguard national interests and maintain economic independence, can swiftly transform into tools of geopolitical pressure.

 

As countries place greater emphasis on national security over simple economic efficiency, the international trading system encounters unparalleled fragmentation, leading to significant consequences for global prosperity, collaboration, and the rules-based international order that has regulated world trade for many years.

Aatmanirbhar Bharat

The US tariff on India acts as a driving force for the Aatmanirbhar Bharat initiative. The Self-Reliant India vision, founded on five pillars—economy, infrastructure, technology-based systems, dynamic population, and demand—now acquires significance.

Former NITI Aayog CEO Amitabh Kant says, "Trump has given us a rare opportunity to advance our reforms significantly. This viewpoint reinterprets the crisis as a chance to enhance local manufacturing skills and lessen reliance on unstable global markets.”

The Aatmanirbhar Bharat initiative highlights sovereign interdependence, achieving self-sufficiency to function independently while staying interconnected to contribute globally. The tariff shock illustrates the necessity of this balance for preserving strategic autonomy in a divided world.

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The government's Rs 20 lakh crore economic stimulus program embodies a holistic strategy that integrates instant relief via liquidity support and direct cash payments alongside enduring structural changes. The Production Linked Incentive (PLI) program has drawn investments totaling Rs 4,784 crore and led to overall production amounting to Rs 2.04 lakh crore, which consists of exports worth Rs 80,769 crore. Important policy measures involve relaxing lending standards for impacted exporters, cutting compliance expenses, and enhancing infrastructure investment.

Future Roadmap

India's response approach encompasses diversification in various aspects. Trade diversification involves strengthening ties with Japan, South Korea, the EU, and Australia. The agreement of the European Free Trade Association will take effect starting October 1st. India has also enhanced economic interactions with several plurilateral and minilateral groupings, such as ASEAN and BRICS, to mitigate the effects of the global supply chain and associated policy disturbances.

Amid ongoing tensions, negotiations between India and the US are progressing, with the upcoming meeting set for August 25 in New Delhi. India upholds its objective of increasing trade with the US to $500 billion by 2030—termed "Mission 500"—while safeguarding key interests with defined "red lines" regarding agricultural tariffs and food security.

India might need to implement monetary actions to support domestic demand, while fiscal consolidation could be deprioritized in favor of higher capital spending. These potential monetary and fiscal measures reflect India's dedication to sustaining growth momentum in the face of external challenges.