Trump Imposes 126% Tariff on India's Solar Imports, Putting India-US Trade Deal at Risk
The United States has levied preliminary duties of 126% on solar imports from India, a move that threatens to unravel ongoing India-US trade negotiations and signals that Washington's "America First" policy continues to override strategic bilateral partnerships.
Why the US Imposed These Tariffs
The US Commerce Department announced the steep levies following a determination that India unfairly subsidised its domestic solar manufacturing sector, enabling Indian exporters to undercut American-made products on price. The department simultaneously set preliminary duties on other Asian solar suppliers — ranging from 86% to 143% for Indonesia and 81% for Laos.
The timing is particularly significant. The tariff announcement comes just weeks after New Delhi and Washington had agreed on a framework for an interim trade deal that would have brought down duties on Indian exports from 50% to 18%. That deal's prospects have now been clouded, and a three-day bilateral meeting scheduled for this week to advance the interim trade agreement has already been postponed by Indian and American officials.
India's Solar Export Boom — and Its Roots
India has emerged as a major supplier of solar modules to the US market in recent years. Solar exports from India to the US reached $792.6 million in 2024, representing a nine-fold increase from 2022 levels — a dramatic surge driven in part by a broader shift in global solar supply chains.
India, Indonesia, and Laos together accounted for 57% of US solar module imports in the first half of 2025. Much of this growth is attributed to Chinese manufacturers relocating production to these countries to circumvent existing US trade barriers — a strategy that American trade authorities have now moved to address head-on.
Industry Reactions: A Divided Response
Domestic US solar manufacturers have welcomed the tariff decision. Tim Brightbill, lead attorney for the Alliance for American Solar Manufacturing and Trade, described the move as a victory for domestic investment, arguing that American manufacturing cannot survive if unfairly priced foreign imports are allowed to distort the market.
However, the view from US solar project developers and installers is far less positive. By effectively shutting out Indian supply, the tariffs risk driving up the cost of solar project development at a time when the industry is already contending with elevated interest rates and policy uncertainty. Critics warn that the move could slow the pace of clean energy deployment across the country.
What Happens Next
The current 126% duty is a preliminary determination. A final ruling on the subsidy investigation is expected by July 6, 2026, and will run concurrently with a separate anti-dumping investigation into the same set of countries. Depending on the outcome, duties could be revised upward or downward.
For India, the stakes are high. The solar sector has been one of the fastest-growing components of its manufacturing export story, and losing preferential access to the US market — the world's largest solar importer — would be a meaningful setback. Indian policymakers and industry leaders will be closely watching the final determination and its implications for the broader India-US trade relationship.
Broader Implications for India-US Relations
The tariff move underscores a recurring tension in the India-US relationship: the gap between strategic partnership rhetoric and protectionist trade policy. While both governments have emphasised the importance of deepening bilateral economic ties, the latest development suggests that commercial and political pressures in Washington can quickly override diplomatic goodwill. How India responds — and whether trade negotiations can be revived — will be a key story to watch in the months ahead.
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