The recent trade actions by the United States—imposing new tariffs on Indian exports—have ignited heated debate across the world about the future of international economic relations. Against this backdrop, Indian Prime Minister Narendra Modi’s impassioned Independence Day speech takes on global significance. Beyond the symbolic setting of the Red Fort, Modi’s call to defend domestic interests is emblematic of a broader realignment in trade politics that affects multiple nations and the very foundations of global commerce.
The Tariff Timeline: What Happened?
On August 7, 2025, the United States enforced a 25% tariff on Indian exports under an executive order signed by President Donald J. Trump. Just a day prior, an additional 25% tariff was announced, specifically targeting Indian goods in response to continued Indian imports of Russian oil. This means that by August 27, Indian exports to the US could be facing a tariff burden as high as 50%, making it one of the highest rates currently levied on any major US trading partner.
This escalation comes after the collapse of trade talks between both countries. Analysts attribute the breakdown to disagreements over the extent of market access for US agricultural and dairy products and India’s energy dealings with Russia. While both parties had initially expected a breakthrough—potentially capping tariffs at 15%—no deal materialized, and a punitive approach won out.
Tariffs of this magnitude are already altering trade flows and business confidence. According to a study by the Global Trade Research Initiative, Indian exporters have begun to see significant headwinds in several sectors:
Seafood (shrimp): Indian shrimp, forming a large share of US imports, now confronts tariffs up to 60%, leaving them uncompetitive compared to rivals in Canada and Chile.
Organic chemicals and industrial goods: Exporters in these sectors face effective duty rates of 50% or more, reducing price competitiveness in the US market.
Textiles, jewelry, and machinery: Critical export categories for India will see sharply increased duties, with some sub-segments facing rates above 60%.
MSMEs: Small businesses—engines of export-led growth—face disproportionate impacts since they have fewer resources to weather volatility.
However, pharmaceuticals, many electronics, and petroleum products remain exempt, providing some relief to Indian exporters. The choice of sectors exempt from tariffs suggests a selective US approach, aiming to minimize costs for its own consumers and health sector.
Modi’s Message: Resilience and Self-Reliance
Prime Minister Modi asserted, “If any policy goes against India’s farmers, fishermen, or cattle rearers, I will stand like a wall.” He further remarked on the broader economic climate, emphasizing the importance of resilience and self-reliance amidst increasing protectionism and what he described as “economic selfishness” on the world stage. Modi urged India and other emerging economies to focus on growth and self-strengthening, rather than lamenting global disruptions.
Modi urged the country to move towards more self-reliance, manufacture everything from fertilisers to jet engines and EV batteries, and vowed to protect farmers in the face of a trade conflict with Washington. With the punishing tariffs imposed on Indian exports by Trump expected to hurt growth in the world’s fastest growing major economy, Modi announced lower goods and services taxes (GST) from October – a move that could help boost consumption.
As mentioned above, Trump’s tariffs and the collapse of trade talks, are largely due to differences over imports of American farm and dairy products. “Farmers, fishermen, cattle rearers are our top priorities,” Modi said in his customary annual address from Red Fort in New Delhi. He added, “Modi will stand like a wall against any policy that threatens their interests. India will never compromise when it comes to protecting the interests of our farmers,”.
This message resonates beyond Indian borders, reflecting anxieties in many emerging economies that face similar Western trade actions or conditionalities. It also underscores the shifting power dynamics of the 21st-century global economy, where developing countries are refusing to play purely defensive roles in trade negotiations.
Policy Consultations for an Effective Response
In response to the US tariffs, India’s Ministry of Commerce and Industry has initiated wide-ranging consultations with key stakeholders, including exporters, business leaders, and industry groups. The goal is to analyze the implications of these trade measures and build a comprehensive response to protect Indian interests. Stakeholders from across the economic spectrum—farmers, laborers, entrepreneurs, exporters, and small to medium enterprises—are being considered in India’s strategy.
Calling for Fairness in International Trade
India has officially described the US actions as “unfair, unjustified, and unreasonable.” The government maintains that its imports are guided by market realities and the need to secure affordable energy for its population of over 1.4 billion.
This stand by India not only has local significance, but highlights broader questions for the global community: What is the way forward for international trade, and how will countries balance national priorities with the demands of an interconnected, but fractious, world economy? As various economies seek to safeguard their interests, the search for fair solutions and cooperative frameworks remains a crucial challenge.
