Tariff tensions between US and India have intensified after the Donald Trump administration published a draft notice on Monday confirming plans to impose a 50% duty on Indian imports. The draft from the US Department of Homeland Security stated the tariffs would apply to Indian goods “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 27, 2025.”
Will Trump Tariffs Hurt India Only?
The move, aimed at penalising India for continuing to purchase Russian crude oil, has provoked a strong response from Prime Minister Narendra Modi. Modi emphasised that India would not compromise on the interests of farmers, small-scale industries, or domestic producers.
The Trump administration had earlier announced its decision to double duties on Indian products from 25% to 50%. The White House justified the action as a strategy to pressure Russian President Vladimir Putin into entering peace talks with Ukraine.
However, economists and trade experts caution that such tariffs will not only hurt India but also take a toll on American consumers and businesses.
Data Say US Businesses And Consumers Are Affected By Trump Tariffs
President Trump has defended his trade policy, insisting that the levies are not harming US households.
“It been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury’s coffers,” Trump wrote on Truth Social earlier this month.
“Also, it has been shown that, for the most part, Consumers aren’t even paying these Tariffs, it is mostly Companies and Governments, many of them Foreign, picking up the tabs.”
But data cited by CNN and other economic research suggests otherwise. Evidence indicates that American businesses and consumers are shouldering much of the burden.
How US Consumer Will Be Impacted
Goldman Sachs analysts warn that the consumer impact of the new tariffs is only beginning to unfold. Research from the investment bank suggests that while US companies have so far absorbed the bulk of tariff costs, more of the burden will shift to consumers as firms pass on expenses through higher prices.
By June, US households had already absorbed 22% of tariff-related costs. That figure is projected to rise to 67% if the latest round of duties follows past patterns.
Goldman Sachs estimates that about 70% of direct tariff costs will ultimately fall on consumers, potentially rising to nearly 100% once spillover effects from domestic producers raising prices are factored in.
The net effect is expected to be faster inflation. Goldman analysts predict that the core personal consumption expenditure index – a key inflation measure for the Federal Reserve – will rise to 3.2% year-on-year in December, compared with 2.8% in June. Without tariffs, the same measure would be closer to 2.4%.
Broader Impact of Trump Tariffs – Inflation, Recession
The broader concern among economists is that Trump’s tariff policies could weaken the US economy. Higher consumer prices, coupled with a slowing job market, raise fears of slower growth and even the risk of recession.
A study by the Budget Lab at Yale University estimated that the average American household will pay an additional $2,400 this year because of tariffs. Clothing and textiles are expected to be among the hardest-hit categories.
Economists broadly agree that, contrary to Trump’s repeated assertions, tariffs will not strengthen the US economy. Instead, they are likely to fuel inflation, dampen consumer spending, and slow job creation.
Also Read: How Is India Responding To Trump’s 50% Tariffs? Swadeshi Revival, Market Diversification And More