August 2, 2025, New Delhi – In a significant development, U.S. President Donald Trump has deferred the proposed 25% tariff on Indian imports for seven days, while immediately imposing a steep 35% tariff on Canadian goods starting August 1, 2025. The Trump administration’s ambitious plan to secure 90 trade deals in 90 days has fallen short, with only seven countries reaching agreements so far, raising concerns about global trade dynamics and their impact on India.

India Gets Temporary Relief from Tariff

The postponement of the 25% tariff on India, initially slated for August 1, 2025, grants a brief respite as negotiations continue. The tariff, which also includes a penalty for India’s trade with Russia for oil and military equipment, would affect roughly $90 billion in U.S. imports from India, including critical sectors like smartphones. With India emerging as a key supplier for U.S. markets—Apple’s shift to manufacturing most iPhones in India by 2025 highlights this trend—the stakes are high.

The delay, now extended to August 7, 2025, stems from ongoing U.S.-India trade talks. U.S. Treasury Secretary Scott Bessent criticized India for “slow progress” and its role in purchasing and re-selling Russian oil under sanctions. However, U.S. Trade Representative Jamieson Greer described the discussions as productive, though unresolved issues, particularly around agricultural and dairy market access, persist. India’s Ministry of Commerce emphasized its commitment to a “fair and balanced” deal, but the looming deadline adds pressure to finalize terms.

Canada Hit with Immediate 35% Tariff

Canada, meanwhile, faces an immediate 35% tariff on certain goods, escalating from the previous 25% on non-USMCA-compliant imports. Trump justified the move by pointing to Canada’s alleged role in the flow of illegal drugs like fentanyl into the U.S., despite data showing Canada contributes less than 1% of such smuggling. Canadian Prime Minister Mark Carney called the tariffs “unjustified,” highlighting Canada’s $1.3 billion border security initiative launched in December 2024.

The tariffs target Canada’s auto and metals industries, which account for a significant portion of its $413 billion in annual exports to the U.S. Canada retaliated with tariffs on U.S. goods, including a 25% levy on non-USMCA autos and duties on products like whiskey and appliances. This trade dispute threatens higher prices and supply chain disruptions, impacting both nations’ economies.

Trump’s 90-Deals-in-90-Days Goal Falters

Launched on April 2, 2025, as part of Trump’s “Liberation Day” trade initiative, the goal of securing 90 trade deals in 90 days aimed to address U.S. trade deficits. However, only seven agreements have been finalized, covering:

• United Kingdom: 10% tariff on U.K. goods, with exemptions for autos and aerospace.
• Japan: 15% tariff, paired with a $550 billion U.S. investment commitment.
• South Korea: 15% tariff, with a $350 billion investment pledge.
• Vietnam: 20% tariff, with a 40% tariff on transshipments to curb Chinese goods.
• Indonesia: 19% tariff, with zero tariffs on U.S. exports to Indonesia.
• Pakistan: Deal focused on oil reserves and tariff reductions.
• European Union: 15% tariff, down from a proposed 30%, with zero tariffs on select U.S. exports.

The shortfall, with only eight deals (including the EU) in 120 days, contrasts with Trump’s earlier claim of securing “over 200 deals” and advisor Peter Navarro’s optimism about the 90-deal target. The limited progress has sparked skepticism about the administration’s trade strategy.

Economic Ripple Effects and Market Turmoil

The tariff announcements triggered a sharp U.S. stock market sell-off on August 1, 2025, compounded by a disappointing U.S. jobs report showing only 73,000 jobs added in July. Economists link the labor market slowdown to tariff-related disruptions, with industries like apparel and electronics facing higher costs. U.S. consumers are bracing for price hikes, with companies like Adidas and Nike announcing increases due to tariffs on countries like Vietnam.

In India, the potential tariff looms large for exporters and the diaspora in the U.S., where Indian goods are integral to supply chains. The Tax Foundation projects that U.S. tariffs will raise household costs by approximately $1,300 in 2025, fueling inflation concerns.

Legal and Global Trade Challenges

Trump’s tariffs, enacted under the 1977 International Emergency Economic Powers Act as a response to a “national emergency” over trade deficits, face legal scrutiny. A May 2025 Court of International Trade ruling questioned the use of emergency powers, and appeals courts have raised similar concerns. Retaliatory tariffs from Canada, the EU, and Brazil, including a 50% Brazilian tariff tied to political issues, have further complicated global trade.

Negotiations with China remain unresolved, with a critical August 12, 2025, deadline. While earlier agreements reduced Chinese tariffs from 145% to 30% and de minimis shipments from 120% to 54%, sticking points like intellectual property remain.

What’s Next for India and Global Trade?

As India approaches the August 7 deadline, the tariff delay offers a chance to secure a favorable deal, but the penalty for Russia trade remains a hurdle. For Indian businesses and the diaspora, staying agile amid these trade shifts is crucial. The Trump administration’s struggle to meet its trade goals, coupled with economic and legal challenges, signals a turbulent road ahead for global commerce.