July 30 (Reuters) – U.S. President Donald Trump announced on Wednesday a 25% tariff on goods imported from India starting August 1 and an unspecified penalty for buying Russian weapons and oil.

Trump’s decision dashes hopes of a limited trade agreement between the two countries, which had been under negotiation for several months.

Here are some reactions:

MADHAVI ARORA, ECONOMIST, EMKAY GLOBAL

“While the negotiations seem to have broken down, we don’t think the trade-deal haggling between the two nations is over yet. We see it more from the lens of geopolitics than purely economics and see both sides striving to get the deal done, even as the power equations may change a bit in U.S. favour.”

RANEN BANERJEE, PARTNER OF ECONOMIC ADVISORY, PWC INDIA

“Higher tariffs for India compared to countries it competes with, for exports to the U.S., are going to be challenging.

However, the expectation is that the trade deal is likely to be finalised shortly and hence the period of applicability of these higher tariffs could be short.”

NILESH SHAH, MD KOTAK MAHINDRA AMC

“Despite the unpredictable policy making of the U.S., the market was expecting a tariff deal to work out as longer-term U.S.-India strategic interests are aligned.

Markets will hope for a ‘TACO’ trade if better senses prevail.

I hope and pray that this unilateral imposition should accelerate Indian policy making to be growth supportive. Our biggest deterrence continues to remain GDP size and competitiveness.”

AGNESHWAR SEN, TRADE POLICY LEADER, EY INDIA

“The decision to raise the U.S. tariff to 25% on Indian exports is an unfortunate development, particularly given the strong strategic partnership that has been steadily built between India and the USA in recent years.

However, it’s important to note that both countries remain positively engaged in active negotiations with the U.S. team expected in India later in August to finalize a comprehensive trade agreement.”

KIRIT BHANSALI, CHAIRMAN, GEM AND JEWELLERY EXPORT PROMOTION COUNCIL INDIA

“This is a deeply concerning development. The Indian gem and jewellery sector, in particular, stands to be severely impacted.

The United States is our single largest market, accounting for over $10 billion in exports – nearly 30% of our industry’s total global trade. A blanket tariff of this magnitude will place immense pressure on every part of the value chain.

We recognise the need to address trade imbalances, but such extreme measures undermine decades of economic cooperation. We urge the U.S. administration to reconsider, and call on both governments to engage in constructive dialogue that safeguards bilateral trade and protects the millions of jobs that depend on it on both sides.”

N. THIRUKKUMARAN, GENERAL SECRETARY OF TIRUPPUR EXPORTERS’ ASSOCIATION

“It is just a negotiation tactic. Trade negotiations are ongoing. The Indian government is tough on certain terms like agriculture and dairy — India isn’t opening up.

If it goes through, U.S. exports from the association will be affected, because Vietnam has lower tariffs. We will be losing our competitive edge.

We are optimistic that an imminent trade agreement will be on the lines of the one with the UK. We have to wait and watch, and not panic. There is no reason to panic.”

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI

“Overall, we continue to see a deal by end Q3 but, a kneejerk reaction in Indian asset classes is likely in the near term.”

S.C. RALHAN, PRESIDENT OF THE FEDERATION OF INDIAN EXPORT ORGANISATIONS

“This is a major setback for Indian exporters, especially in sectors like textiles, footwear, and furniture, as the 25% tariff will render them uncompetitive in the US market against rivals from Vietnam, China, and elsewhere.

However, we remain hopeful that both countries will work towards a bilateral trade agreement.”

AVINASH GORAKSHAKAR, DIRECTOR OF RESEARCH AT PROFITMART SECURITIES

“Until the final document is released, it’s all speculation. India is a large, attractive market that the U.S. cannot afford to ignore, so any move will ultimately be weighed against long-term interests. My sense is that the August 1 deadline may itself be flexible and India is unlikely to budge easily.

In the short term, the announcement could trigger some selling pressure, but in the longer term, I expect the impact to neutralize. India’s market attractiveness remains intact.”

COLIN SHAH, MD, KAMA JEWELRY

“With U.S. being one of the key export destinations, this will severely impact the sectors like gems and jewellery that are heavily dependent on exports.

Going ahead, we expect trade activities to remain muted with U.S. However, we also need to wait and watch how the situation unfolds.”

RAHUL MEHTA, CHIEF MENTOR, CLOTHING MANUFACTURERS ASSOCIATION OF INDIA

“Having seen the several about turns on the tariff front in the case of other countries, I would not press panic buttons right now. But, if the proposed terms do come into effect, it will make our products 7% to 10% more expensive than some of our competitors, and it will certainly hurt our apparel exports to the U.S.

Fortunately, this set-back has come at the time when we have just signed an FTA with UK, and are proceeding rapidly with an FTA with EU.”

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

“For now, the announcement of 25% tariffs is likely to cause volatility in the FX market with mounting depreciation pressure on the rupee. Although the RBI is likely to intervene tomorrow to tamp down the depreciation pressure.”

ADITI NAYAR, CHIEF ECONOMIST, ICRA

“When the U.S. had initially imposed tariffs, we had lowered our forecast of India’s GDP expansion to 6.2% for FY2026, presuming a tepid rise in exports and a delay in private capex. The tariff (and penalty) now proposed by the U.S. is higher than what we had anticipated, and is therefore likely to pose a headwind to India’s GDP growth. The extent of the downside will depend on the size of the penalties imposed.”

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