India’s Chief Economic Adviser (CEA V. Anantha Nageswaran) on Thursday expressed optimism that the 25% penal tariff imposed by the US on Indian imports could be rolled back after November 30, 2025, paving the way for stronger trade relations between the two nations.
Background of the Tariff Dispute
In response to India’s oil trade with Russia, former US President Donald Trump had announced an additional 25% penal tariff on Indian goods, on top of the earlier 25% reciprocal tariff — effectively doubling duties to 50% on certain imports.
The CEA said that while the move may have been driven by geopolitical considerations, ongoing developments suggest a positive outcome. “My intuition is that the penal tariff will not be there after November 30,” he said, noting that conversations are ongoing between New Delhi and Washington.
Timeline for Resolution
Nageswaran predicted that the issue could be resolved within the next 8–10 weeks, adding that “beneath the surface, discussions are progressing between the two governments.”
Legal Challenges in the US
The tariffs, imposed under the International Emergency Economic Powers Act (IEEPA) of 1977, were challenged in US courts.
- A US Appeals Court ruled that Trump had overstepped his authority, as the law did not explicitly allow imposing tariffs.
- The matter is now before the US Supreme Court, which has scheduled a hearing in early November 2025 for expedited resolution.
Signs of Improved Ties
Despite the tariff dispute, recent weeks have seen positive exchanges between PM Modi and Donald Trump, signaling a possible turnaround in bilateral ties. If the penal tariff is lifted, it could boost trade flows and ease tensions between the two countries.
