ALL TN Comp Exams Prep

The Website contains more than 2,00,000 questions. For each test, new questions are loaded.

August 27, 2025 August 27, 2025 - Current affairs for all the Exams: US Imposes 50% Tariffs on Indian Goods, Sparking Economic Concerns

The United States has begun imposing significant tariffs, totaling 50%, on a wide range of Indian exports, effective August 27, 2025. This move, which includes an additional 25% duty on top of existing tariffs, is expected to severely impact India's export-oriented sectors, particularly labor-intensive industries such as textiles, gems and jewelry, and shrimp. The decision has led to a notable downturn in Indian stock markets, with the Sensex and Nifty experiencing sharp declines. The Indian government and the Reserve Bank of India (RBI) are assessing the situation and exploring measures to mitigate the economic shock, while experts warn of potential impacts on India's GDP growth.

In a significant development for the Indian economy, the United States has officially commenced the imposition of new tariffs on Indian goods, bringing the total tariff rate to 50% for various products. This measure, which includes a supplementary 25% duty on top of existing tariffs, came into effect at 12:01 AM Eastern Daylight Time on August 27, 2025.

The US Department of Homeland Security issued a draft notification on August 25, 2025, confirming the heightened duties on Indian merchandise. This action is largely attributed to ongoing trade disputes and, as some reports suggest, India's continued purchase of Russian crude oil.

Impact on Indian Exports and Economy

The tariffs are projected to hit approximately 66% of India's total exports to the US, valued at an estimated $60.2 billion in FY2025. Sectors expected to be most severely affected include textiles, apparel, gems and jewelry, shrimp, carpets, and furniture. These are primarily labor-intensive industries, raising concerns about potential job losses and slower growth in rural areas.

Analysts from the Global Trade Research Initiative (GTRI) estimate that India's exports to the US could decline from $86.5 billion in FY2025 to $49.6 billion in FY2026 if the tariffs remain in place. This could potentially reduce India's GDP growth by 0.9 percentage points in the worst-case scenario. Some economists suggest the impact on real GDP growth could be around 0.6 percentage points.

Market Reaction and Government Response

The news has already sent ripples through the Indian financial markets. On Tuesday, August 26, 2025, Indian equities experienced their steepest fall in three months. The Sensex tumbled 849 points (1.04%) to close at 80,787, while the Nifty slipped 256 points (1.02%) to end at 24,712. The rupee also extended its losing streak, closing at 87.69 against the US dollar. All sectoral indices on the NSE, except for fast-moving consumer goods (FMCG), declined, with realty, PSU bank, and consumer durables taking the biggest hit.

In response to the escalating situation, the Reserve Bank of India (RBI) Governor Sanjay Malhotra stated on Monday that the central bank is ready to implement policy measures to support economic growth, particularly for sectors more severely impacted by the tariffs. The government is also considering fiscal support measures for exporters. The Prime Minister's Office was expected to convene a high-level meeting to review measures for Indian exporters. While domestic consumption is anticipated to help stabilize India's overall economy, exporters are being urged to explore new markets and focus on value-added products.

Certain product categories, such as steel, aluminum, passenger vehicles, light trucks, copper products, and humanitarian donations, are currently exempt from the surcharge. Additionally, shipments that left India before August 27, 2025, and are cleared in the US before September 17, 2025, will not face the additional duty.

Back to All Articles