India-US Trade deal under threat? Trump administration imposes 126% tariffs on Indian solar imports

In a move that may further complicate efforts towards a bilateral trade agreement between New Delhi and Washington, the US on Wednesday imposed countervailing duty of up to 126% on Indian solar exports. 

The action follows a review by the US Commerce Department, which concluded that Indian manufacturers benefited from state support that allowed them to price their products below US-made alternatives.

Similar measures have also been announced against other exporting nations, with preliminary duties ranging from 86% to 143% on imports from Indonesia and 81% on shipments from Laos.

The move comes just weeks after India and the US agreed on a broad framework for a trade arrangement aimed at reducing tariffs on Indian exports to around 18%, down from nearly 50% earlier. However, that plan was disrupted after the US Supreme Court struck down earlier Trump-era tariffs, prompting the administration to introduce a new baseline import duty of 10%, with scope for further increases.

Supply chain shifts under scrutiny

According to reports, US officials argue that the surge in solar imports from India and parts of Southeast Asia reflects a shift in production by Chinese manufacturers seeking to bypass trade barriers. India, Indonesia, and Laos together accounted for nearly 57% of US solar module imports in the first half of 2025, according to industry data.

India, in particular, has seen a sharp rise in shipments. US imports of Indian solar equipment climbed to $792.6 million in 2024, almost nine times higher than levels recorded in 2022.

Tim Brightbill, lead counsel for the Alliance for American Solar Manufacturing and Trade, supported the decision, describing it as a boost for investments in American solar manufacturing. “Those cannot succeed if unfairly traded imports are allowed to distort the market,” he said.

Concerns for US developers

However, reports say that the project developers in the US solar sector warn that the duties could push up costs and slow new installations. With higher financing costs and regulatory uncertainty already weighing on the industry, cutting off access to Indian supplies may add further pressure.

US authorities are expected to issue a final ruling on the subsidy investigation by July 6. A parallel anti-dumping probe into solar imports from the same countries is also underway.