US Effective Tariff on Indian Goods Rises From 2.4% To 20.7% In 2025 : Fitch
The new tariff structure came into effect during Q3 2025 and is expected to have broad implications for India’s global trade, particularly with the US, its largest export destination. (AP Photo/Ben Curtis)
India is now facing a significantly steeper trade barrier, as Fitch Ratings reports that the effective tariff rate imposed by the United States on Indian goods has jumped to 20.7 per cent in 2025, up from just 2.4 per cent in 2024.
The surge follows the formal announcement by US President Donald Trump of a 25 per cent tariff on Indian goods, alongside an ambiguous additional “penalty” related to India’s ongoing energy trade with Russia.
The new tariff structure came into effect during Q3 2025 and is expected to have broad implications for India’s global trade, particularly with the US, its largest export destination.
This move reflects Washington’s growing frustration with New Delhi’s neutrality in the Russia-Ukraine war and continued oil imports from Moscow, despite geopolitical pressure from both the US and EU.
Fitch said the overall US effective tariff rate now averages 17 per cent, with India, Brazil, Taiwan, and Switzerland among the most affected. The agency highlighted that India’s rate is disproportionately high, even compared to the 15 per cent rate imposed on EU goods.
Impact on Indian Growth Outlook
The rising trade friction has already triggered a downward revision in India’s GDP forecasts:
- Goldman Sachs cut India’s 2025 growth projection to 6.5 per cent and 2026 to 6.4 per cent, stating:
“Further downside risk to the growth trajectory mainly emanates from the uncertainty” caused by tariffs.
Structural Risks to Manufacturing Ambitions
According to Christian de Guzman, Senior Vice President at Moody’s Ratings, “Curtailed access to the largest economy globally diminishes prospects for India’s ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics.”
Nonetheless, Moody’s maintains a positive medium-term outlook, noting that India is less trade-reliant than other Asia-Pacific economies and could absorb some external shocks more effectively.