The US’s trade woes with India intensified in 2025, posting a $58.2 billion goods-and-services deficit— a sharp rise from $45.7 billion—despite hefty 50% tariffs under President Trump. Fresh government reports expose the policy’s limited impact.
In December, the national deficit leaped to $70.3 billion (from $53B), with India contributing $5.2 billion. Yearly aggregates: $901.5 billion total deficit (vs. $903.5B in 2024), exports at $3,432.3B (+$199.8B), imports $4,333.8B (+$197.8B).
Dissecting components, goods deficit hit $1,240.9B (+$25.5B); services surplus $339.5B (+$27.6B). Comparative deficits: EU $218.8B, China $202.1B, Mexico $196.9B, Vietnam $178.2B, Taiwan $146.8B, India $58.2B.
Judicial intervention came via Supreme Court, nullifying initial tariffs. Trump countered with Section 122 authority from the 1974 Trade Act, rolling out 10% temporary import duties for 150 days from February 24 to fix payment disequilibria.
White House exemptions shield essentials: critical minerals, bullion alloys, energy feeds, resources, fertilizers, select crops, pharma, electronics, passenger cars. This nuanced strategy seeks deficit reduction without hamstringing key industries.
Looking ahead, the deficit surge challenges tariff orthodoxy, spotlighting consumption patterns and currency roles. As new measures take hold, monitoring economic ripple effects on bilateral investment and global markets will be crucial for policymakers.