Kolkata: In development that can put the India-US trade deal, which is supposed to be in the final stages, US President Donald Trump has imposed 126% duty on solar imports from India, with reports saying that US officials believe the Narendra Modi govt is proving subsidies to the solar industry. The move comes after days of the US Supreme Court trashing his reciprocal or punitive tariffs illegal, saying the US president acted beyond his powers and the IEEEP tariffs needed Congressional approval which was never taken.
The solar equipment industry is one of the most rapidly growing sectors of import from India. In 2024, solar imports to the US from India went up to $792.6 million, which is a rise of about 900% compared to that in 2022, reports stated. It seemed clear to experts that the US president won’t hesitate to jeopardise the future of the emerging trade deal to protect his America first policy.
US justification
The justification of the abnormally high tariff — which again seemed to be illegal after the US court ruling — was that the US Commerce Department found that New Delhi offered subsidies to the companies which manufactured these equipment. It led to the manufacturers and exporters price these items very cheap compared to theose made in the US. Incidentally, the US also fixed initial rates ranging from 86% to 143% on Indonesia. It also set 81% tariff for Laos.
US solar item imports
The US has been importing a lot of solar power equipment India, Indonesia, and Laos. Cumulatively, they account for 57% of US solar module imports in the first half of 2025. This also elbowed out the Chinese solar equipment firms. To circumvent this, Chinese manufacturers have subsequently moved production units in Southeast Asia to keep their market. “Those cannot succeed if unfairly traded imports are allowed to distort the market,” remarked Tim Brightbill, chief attorney for the Alliance for American Solar Manufacturing and Trade. He supported the move of the Trump administration as a victory for the investments inside the US.
Future of the India US trade deal
In the midst of the uncertainty following the US courts striking down the retaliatory tariffs by Trump, India could naturally hope for the terms being renegotiated. While the commerce minister has said that they are keeping the developments under close watch, Trump himself has asserted that all delas that were being negotiated with different countries such as India will continue unaltered. He had posted on his social media that Indian imports will be subjected to a 18% tariff (down from 50%) while US goods will enjoy a duty-free access into India. But with the courts cancelling his tariffs, that entire premise seems to be lost.