US Faces India’s Ultimatum: Approve Deal, Drop 50% Tariffs

India has submitted what it calls a “final” revised trade proposal to the United States, centering on the urgent removal of steep tariffs that have strained bilateral commerce. The move comes amid escalating tensions over additional levies imposed by President Trump’s administration. This development highlights ongoing efforts to salvage a comprehensive trade pact between the two nations.​

Tariff Dispute Origins

The friction began in August 2025 when the US introduced 25% reciprocal tariffs on various Indian exports. This was followed by another 25% “penal” tariff tied to India’s purchases of discounted Russian oil, which Washington views as aiding Moscow’s activities in Ukraine. Combined, these measures have raised duties on some Indian products to 50%, severely impacting exporters despite India’s baseline tariffs remaining competitive at around 19% globally. Indian officials note prior reductions in Russian oil imports as a goodwill step.​

India’s latest offer promises swift tariff reductions on key US imports, including almonds, walnuts, apples, select industrial products, and high-end motorcycles. Negotiators describe this as India’s most generous package to date, developed after five rounds of talks and a recent call between Prime Minister Narendra Modi and President Trump. Commerce Minister Piyush Goyal emphasized that the US should proceed with the deal if satisfied, signaling readiness to finalize.​

US Lawmakers Push Back

In a notable response, three US House representatives introduced a resolution on December 12, 2025, calling for the immediate repeal of the 50% tariffs. They argued the measures harm American jobs, innovation, supply chains, and consumers while underscoring India’s role as a vital strategic partner. This bipartisan initiative reflects growing domestic pressure on the administration to ease trade barriers with New Delhi.​

Despite progress, no agreement has been sealed. Talks have stalled over the tariff issue, even as both sides acknowledge mutual benefits in deeper economic ties. India’s proposal shifts the ball to Washington, testing the Trump administration’s priorities in global trade amid its “America First” stance.​

This episode underscores the delicate balance in India-US relations, blending economic rivalry with geopolitical alignment. Resolution could unlock broader cooperation, but persistent tariff hurdles risk prolonging uncertainty for businesses on both sides.​