India could face tariffs of up to 25% if it fails to reach a trade agreement with the United States by August 1, President Donald Trump warned on Tuesday, escalating pressure on New Delhi as bilateral negotiations enter a critical phase.
Speaking to reporters, Trump confirmed the possibility of punitive measures: “Yeah, I think so,” he said when asked whether India would be hit with higher tariffs in the absence of a deal. “India has charged basically more tariffs than almost any other country. But now I’m in charge, and you just can’t do that.”
The warning comes as India and the US scramble to finalise a long-awaited trade agreement ahead of a deadline set by Washington. Without a deal, India risks joining a list of countries already targeted by the Trump administration’s tariff measures, aimed at opening foreign markets to American goods.
While the two sides have been locked in negotiations for months, officials have alternated between optimism and caution. US Trade Representative Jamieson Greer acknowledged that progress has been made, but added that India’s longstanding protectionist trade policy posed significant hurdles. “India has been premised on strongly protecting their domestic market,” Greer said. “But we continue to have very constructive discussions.”
Agriculture and dairy products remain key sticking points. The US has been seeking broader access to India’s vast agricultural sector, while India has resisted, citing concerns over food security and the livelihoods of millions of small-scale farmers. “The agriculture sector is very sensitive for India,” Commerce Minister Piyush Goyal told CNBC last week. “We will ensure our farmers’ interests are well protected.”
Despite the challenges, Goyal struck an optimistic tone. Speaking to Reuters, he said talks were making “fantastic progress” and expressed hope for a “very consequential partnership.”
The dispute comes at a time when trade between the two countries is at an all-time high. The US was India’s largest trading partner in 2024, with bilateral trade reaching $190 billion. However, the US continues to run a $45 billion trade deficit with India — a figure President Trump is determined to narrow.
India has already taken steps to appease Washington, lowering tariffs on items such as Bourbon whiskey and motorcycles. But without a comprehensive agreement, Trump has signaled he is prepared to act unilaterally.
The Indian government has yet to respond to the latest tariff threat, and its commerce ministry did not immediately comment.
