On August 6, 2025, the U.S. government announced a sharp increase in tariffs on Indian goods and services, raising them from 25 per cent to 50 per cent, effective August 27. The tariff impacts $54 billion of India’s $86.5 billion in annual exports to the U.S., with the government citing concerns over India’s trade relations with Russia as the reason.
This new policy is particularly significant because many American consumers depend on Indian products, including textiles, gems, and IT services. The effects of this tariff will largely depend on how sensitive consumers are to price changes, a concept known as price elasticity of demand.
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