Home › Policies & Regulations ›50 Percent Tariffs, Billions at Stake: Inside the India–US Trade Showdown
50 Percent Tariffs, Billions at Stake: Inside the India–US Trade Showdown
The new US tariffs of 2025 targeting India explicitly could directly affect the renewable trade.
August 11, 2025. By News Bureau
India–US trade ties are under strain as tariff tensions escalate. On July 30, 2025, US President Donald Trump announced a 25 percent tariff on Indian goods, effective August 1, rising to a steep 50 percent by August 27, the highest among US partners penalised over Russian dealings. Indian exporters, who can absorb only 10–15 percent cost increases, face severe pressure, according to the BBC.
This article examines the history of tariff disputes, renewable trade links, current measures and their impact, and explores alternatives for India amid shifting trade dynamics.
Renewables Trade Between the US and India
This article examines the history of tariff disputes, renewable trade links, current measures and their impact, and explores alternatives for India amid shifting trade dynamics.
Renewables Trade Between the US and India
Despite the existing trade frictions, renewable energy has been a growing area of collaboration and commerce between the US and India. India has a huge market and manufacturing potential, while the US has advanced technology and capital.
Solar Photovoltaics (PV)
Solar Photovoltaics (PV)
Solar is a key focus in both countries, with India aiming for 280 GW solar by 2030, and the US rapidly adding PV capacity too. Exploiting the opportunity, India has become an exporter of solar modules to the US.
According to a joint report by IEEFA and JMK Research, between FY2022 and FY2024, India’s solar module exports surged 23-fold, with the US absorbing the vast majority - roughly 99 percent - of these panel exports in 2024.
In value terms, Indian manufacturers exported nearly USD 2 billion worth of solar modules to the US in FY2024, thanks to recent tariffs and import restrictions on Chinese-origin panels. Firms like Waaree, Adani Solar, and Vikram Solar ramped up production to supply US projects.
According to a joint report by IEEFA and JMK Research, between FY2022 and FY2024, India’s solar module exports surged 23-fold, with the US absorbing the vast majority - roughly 99 percent - of these panel exports in 2024.
In value terms, Indian manufacturers exported nearly USD 2 billion worth of solar modules to the US in FY2024, thanks to recent tariffs and import restrictions on Chinese-origin panels. Firms like Waaree, Adani Solar, and Vikram Solar ramped up production to supply US projects.
Wind Energy
India produces all the major components of wind turbines, according to the International Trade Administration, US DoC. Companies like Suzlon (Indian), as well as Indian arms of global firms (e.g. Vestas India, GE India), manufacture wind turbines and parts domestically.
While US-India trade specifically in wind components hasn’t been highlighted as much as solar, the American companies, like GE, are involved in India’s wind sector, and conversely, Indian-origin wind components could find a market in the US.
Any general increase in steel or machinery tariffs could indirectly affect the sector.
Any general increase in steel or machinery tariffs could indirectly affect the sector.
Battery Storage & Grid Technology
India’s growing demand for batteries for solar storage and EVs is met largely through imports, while the US - despite its strong battery tech and R&D - produces under 10 percent of its battery cells. Wood Mackenzie warns tariffs on Chinese imports could push US BESS project costs up by over 50 percent, making India a potential future supplier if its PLI-backed Advanced Chemistry Cell industry matures. A tariff war could hurt US storage ambitions.
Beyond renewables, the nations also cooperate in civil nuclear energy and emerging areas like green hydrogen, though these focus more on joint research than goods trade.
Beyond renewables, the nations also cooperate in civil nuclear energy and emerging areas like green hydrogen, though these focus more on joint research than goods trade.
Brief History of US-India Trade Relations and Tariff Disputes
The US and India have long had a complex trade relationship, frequently characterised by disputes over market access, tariffs, and trade deficits. Historically speaking, there have been various major friction points between the countries over trade and tariffs.
The Beginning
In 2018, US President Trump criticised India’s 100 percent tariffs on Harley-Davidson bikes, later imposing 25 percent steel and 10 percent aluminium tariffs. India retaliated, and in 2019 the US revoked India’s GSP status, affecting USD 5 billion in duty-free exports. India responded with tariffs on 28 US goods.
India’s average tariff (17 percent) far exceeds the US’s 3.3 percent, especially in agriculture (39 percent vs 4 percent), prompting Trump to call India the “tariff king.” The US goods trade deficit with India reached nearly USD 50 billion in 2024, the 10th largest globally, yet imports from India face among the highest US tariffs. Past tensions underpin today’s escalations.
India’s average tariff (17 percent) far exceeds the US’s 3.3 percent, especially in agriculture (39 percent vs 4 percent), prompting Trump to call India the “tariff king.” The US goods trade deficit with India reached nearly USD 50 billion in 2024, the 10th largest globally, yet imports from India face among the highest US tariffs. Past tensions underpin today’s escalations.
Trump 2.0: Current Scenario & Timeline
Early in Trump 2.0 (Jan–Feb 2025), optimism grew with talks of a Bilateral Trade Agreement and a goal to double trade to USD 500 billion by 2030. As a goodwill move, India cut tariffs on US luxury goods - Harley-Davidson and bourbon whiskey.
Sudden Reversal
However, the India-US trade relations soon witnessed a sudden dip in April 2025, when the Trump administration announced a reciprocal tariffs policy in retaliation for India’s continued purchase of Russian oil. The policy proposed a potential 26 percent tariff specifically on Indian goods entering the US.
However, facing immediate outcry and fearing economic fallout, the US paused implementation for 90 days for most countries - giving India until July 8, 2025, to negotiate a solution.
However, facing immediate outcry and fearing economic fallout, the US paused implementation for 90 days for most countries - giving India until July 8, 2025, to negotiate a solution.
August 2025 – Trade War Breaks Out
Negotiations failed, and Trump scrapped the tentative trade agreement on July 30, 2025, and announced a 25 percent tariff on all Indian goods effective August 7, on top of existing duties. The very next day, he doubled down, blasting India’s economy as “dead” in an online post and signalling even harsher measures.
By August 6, the US decided to impose a record total tariff of 50 percent on Indian imports, the 25 percent base tariff plus an extra 25 percent penalty tied to India’s Russia ties - a staggering 50 percent import tax.
From India’s side, the tariffs were already high to begin with. From automobiles, alcoholic beverages to agricultural goods, Indian tariffs were always multifold compared to the US.
By August 6, the US decided to impose a record total tariff of 50 percent on Indian imports, the 25 percent base tariff plus an extra 25 percent penalty tied to India’s Russia ties - a staggering 50 percent import tax.
From India’s side, the tariffs were already high to begin with. From automobiles, alcoholic beverages to agricultural goods, Indian tariffs were always multifold compared to the US.
Tariff Wars and Renewable Trade
The new US tariffs of 2025 targeting India explicitly could directly affect the renewable trade. The 25-50 percent tariff range is bound to cause Indian solar modules' price advantage to erode, potentially reducing Indian exports to the US or raising costs for American solar developers.
One of the most immediate impacts of heightened tariffs is increased costs – and the renewable energy sector is particularly sensitive to cost swings.. Any sudden tariff hike may render the project loss-making and shelved.
One of the most immediate impacts of heightened tariffs is increased costs – and the renewable energy sector is particularly sensitive to cost swings.. Any sudden tariff hike may render the project loss-making and shelved.
Rising Equipment Costs
If Indian solar panels face, say, a 30 percent US tariff, American solar farm developers must pay 30 percent more for those modules - costs which either cut into the project’s profitability or get passed on to consumers. A recent analysis by Wood Mackenzie warns that the US is already one of the costliest markets for utility-scale solar, and new tariffs will only further escalate those costs.
Project Delays, Uncertainty, & Higher Prices
Renewable projects have long lead times, with procurement planned 1-2 years ahead. Sudden tariffs disrupt cost planning, delay projects, and raise PPA prices, as per Wood Mackenzie. In the US, utilities may defer new PPAs, while developers postpone starts.
In India, manufacturers hit by US tariffs may cut exports, hurting economies of scale and raising local prices. Projects needing specialised US components could face delays. Higher costs directly squeeze developer margins in both countries, slowing renewable rollout.
Delays and higher input costs can translate to higher costs for end-users. In the US, analysts earlier predicted that if aggressive tariffs persisted, the cost of building new utility-scale solar in the US could be 54 percent higher than in Europe and 85 percent higher than in China by 2025. New US-India tariff tensions are bound to further exacerbate the situation.
In India, any supply chain disruption or lack of competitive imports could also keep Indian renewable prices from falling further.
In India, manufacturers hit by US tariffs may cut exports, hurting economies of scale and raising local prices. Projects needing specialised US components could face delays. Higher costs directly squeeze developer margins in both countries, slowing renewable rollout.
Delays and higher input costs can translate to higher costs for end-users. In the US, analysts earlier predicted that if aggressive tariffs persisted, the cost of building new utility-scale solar in the US could be 54 percent higher than in Europe and 85 percent higher than in China by 2025. New US-India tariff tensions are bound to further exacerbate the situation.
In India, any supply chain disruption or lack of competitive imports could also keep Indian renewable prices from falling further.
Investment Uncertainty and Industry Repercussions
The back-and-forth tariff measures are creating a cloud of investment uncertainty over the market and may even lead to outflows, and a source of hesitation for investors and companies in the renewable sector.
Foreign Direct investment (FDI) and Joint projects are also affected by the uncertain tariff situation as investors assess the overall relationship climate, such as restrictions on technology transfer, political backlash, etc., before pouring in investments.
Moody’s warns the 50 percent US tariff could undermine India’s manufacturing ambitions and economic growth. The impact is visible - foreign investors pulled USD 900 million from Indian equities in August after USD 2 billion in July, with Nifty 50 and Sensex down 2.9 percent and 0.7 percent, respectively. Indian firms such as Vikram Solar and Tata Power planned US solar module factories, but the volatile trade climate may delay commitments, especially if tariffs could be rolled back within months.
If Not the US, Then Who?
Amid tariff turbulence, India is moving to cut its reliance on US trade, while the US will also seek alternatives if Indian goods grow costlier.
Diversifying Export Markets
Beyond the US, the European Union, for instance, could become a bigger buyer of Indian products, from engineering goods to solar panels. Europe has its anti-China tilt for critical supplies, like solar equipment, which is an opportunity for India.
Regions like the Middle East, Africa, and Latin America are also on India’s radar. For example, Indian solar and wind companies have been bidding on projects in Africa and the Middle East. In April 2025, NTPC, in collaboration with the International Solar Alliance (ISA), signed tripartite agreements with seven African nations to develop over 1.5 GW of solar capacity.
Moreover, India has been negotiating free trade agreements (FTAs) with partners like the UK, the EU, and Australia. These might help compensate for the challenges due to US barriers. If US supplies become costly or restricted, India can source advanced renewable technology from Europe - especially Germany and Spain - or from Japan, all known for quality solar, wind, and grid equipment.
Regions like the Middle East, Africa, and Latin America are also on India’s radar. For example, Indian solar and wind companies have been bidding on projects in Africa and the Middle East. In April 2025, NTPC, in collaboration with the International Solar Alliance (ISA), signed tripartite agreements with seven African nations to develop over 1.5 GW of solar capacity.
Moreover, India has been negotiating free trade agreements (FTAs) with partners like the UK, the EU, and Australia. These might help compensate for the challenges due to US barriers. If US supplies become costly or restricted, India can source advanced renewable technology from Europe - especially Germany and Spain - or from Japan, all known for quality solar, wind, and grid equipment.
Alternate Suppliers and Partners
From India’s perspective as an importer of high-tech or specialised goods, if US sources become unviable, there are other options available.
For advanced renewable technology, Europe, specifically Germany and Spain, and Japan have reputable manufacturers of solar, wind, and grid equipment. India could increase purchases from those countries. Notably, in 2022, Germany pledged €10 billion to support India’s clean energy transition.
Furthermore, China is known for its technological advancements and renewable leadership. In 2024, the US and China were neck-and-neck as India’s top trading partners, US slightly ahead at USD 129.2 billion vs China’s USD 127.7 billion.
For advanced renewable technology, Europe, specifically Germany and Spain, and Japan have reputable manufacturers of solar, wind, and grid equipment. India could increase purchases from those countries. Notably, in 2022, Germany pledged €10 billion to support India’s clean energy transition.
Furthermore, China is known for its technological advancements and renewable leadership. In 2024, the US and China were neck-and-neck as India’s top trading partners, US slightly ahead at USD 129.2 billion vs China’s USD 127.7 billion.
Toward Self-Reliance
India aims for long-term self-reliance in energy, backed by policies promoting domestic solar and wind manufacturing. Since April 2022, Basic Customs Duty on imported solar cells and modules - initially 25-40 percent - was cut to 20 percent in Budget 2025 to balance costs and manufacturing growth.
Measures like ALMM and the PLI scheme are also boosting capacity, now at 69 GW for modules and 25 GW for cells, with a 120 GW target by decade’s end. The wind sector is already largely self-sufficient, with local content mandates strengthening domestic supply chains.
Measures like ALMM and the PLI scheme are also boosting capacity, now at 69 GW for modules and 25 GW for cells, with a 120 GW target by decade’s end. The wind sector is already largely self-sufficient, with local content mandates strengthening domestic supply chains.
Please share!
If you want to cooperate with us and would like to reuse some of our content,
please contact: contact@energetica-india.net.
please contact: contact@energetica-india.net.
Next events
Last interviews
Vikas Bansal
President & CEO - International
By Mid-2026, GameChange Solar India Intends to Achieve 100 Percent Localisation: Vikas Bansal
Neha Jain
Head – EV & Innovation Ecosystem
Neha Jain Highlights JSW MG Motor’s Push for Localised, Future-Ready EVs in India
Shekhar Singal
Managing Director
Plug, Play & Power Sustainably: Eastman MD Shekhar Singal on Democratising Solar Energy Access
Deepak Agarwal
Managing Director
CBG is an Attractive and Scalable Business Opportunity in India: GPSR ARYA MD Deepak Agarwal
Amit Banka
Founder & CEO
Balancing Biodiversity & RE is Key to Sustainable Future, Highlights WeNaturalists' Amit Banka
Follow us