The Basmati Battle: Trump’s Rice Tariff Threat Exposes Complex Reality of India-U.S. Agricultural Trade

When President Donald Trump turned to Treasury Secretary Scott Bessent during a White House agriculture meeting on December 8 and demanded to know why India was “dumping” rice into American markets, he added another flashpoint to an already tense bilateral trade relationship—one built on allegations of unfair subsidies, WTO violations, and competing visions of agricultural protectionism.

“Why is India allowed to do that?” Trump asked. “They have to pay tariffs. Do they have an exemption on rice?”

Bessent confirmed that no exemption existed and that negotiations for a broader trade deal were ongoing. Trump’s response was blunt: “But they shouldn’t be dumping. I mean, I heard that. I heard that from others. They can’t do that.”

The exchange, captured on video, has reignited a debate that goes far beyond rice—touching on questions of whether India is genuinely violating international trade rules, whether American farmers are being victimized by subsidized imports, and whether India’s protective agricultural policies contradict its position as a major global exporter.

The Numbers Behind the Narrative

The actual scale of Indian rice exports to the United States tells a more nuanced story than Trump’s “dumping” characterization suggests. During financial year 2024-2025, India exported basmati rice worth $337.10 million to the United States, amounting to 274,213.14 metric tonnes, making the U.S. the fourth-largest market for Indian basmati. Non-basmati rice exports to the U.S. were valued at $54.64 million, making America the 24th largest market for this category.

The Week reported that India exported about 234,000 tonnes of rice to the U.S. in the 2024 fiscal year—less than 5 percent of its total global basmati rice exports of 5.24 million tonnes. According to the India Brand Equity Foundation, West Asia remains the dominant destination for Indian rice, not the United States.

Ajay Srivastava, founder of Global Trade Research Initiative, told Indian News Network that “Trump’s threats appear to be more politically motivated rather than grounded in trade logic,” noting that the $392 million worth of rice India exported to the U.S. in financial year 2025 “constitutes merely 3% of India’s total rice exports, and the majority of these exports are premium basmati rice.”

Yet these relatively modest numbers mask a larger reality: India is the world’s rice superpower. According to BLiTZ and The Logical Indian, India captured 30.3 percent of global rice exports in 2024-2025, far outpacing rivals Thailand and Vietnam. When one country controls nearly a third of global exports, even small shifts in its policies can have outsized market effects.

American Farmers’ Grievances

The controversy erupted when Trump unveiled a $12 billion farm aid package at a White House roundtable with Agriculture Secretary Brooke Rollins and farm-state lawmakers. Meryl Kennedy, CEO of Kennedy Rice Mill in Louisiana, a fourth-generation rice miller, told the president that American producers were “really struggling.”

“We haven’t shipped rice to Puerto Rico in years,” Kennedy noted, according to Business Today, pointing to China shipping rice into Puerto Rico rather than the mainland, alongside imports from India and Thailand. She urged Trump to “double down” on tariffs, claiming “the tariffs are working, but we need to double down.”

Kennedy described rice imports as reaching unprecedented levels, telling Trump: “We’ve never seen imports this great.” She urged the administration to recognize rice as “a national security issue,” calling it “a currency in many of these countries” and warning that subsidized foreign rice was displacing American products abroad.

“Give me the countries, if you can. Go ahead. India, who else? Mark it down, Scott,” the president said.

Kennedy shared “poignant stories of family farms teetering on the brink,” while southern U.S. rice farmers, particularly in Louisiana and Arkansas, voiced “desperation over import surges that have slashed local prices by up to 30% in recent months, compounded by high input costs and inflation.”

Trump directed Bessent to “mark down” the countries mentioned. “Give me the countries, if you can. Go ahead. India, who else? Mark it down, Scott,” the president said, according to Business Today. Bessent reiterated India, Thailand, and China as “the primary culprits, noting that there are others and that a full list could be provided.”

The WTO Subsidy Controversy

At the heart of the dumping allegations lies a years-long dispute at the World Trade Organization over India’s agricultural subsidies—a controversy with legitimate grounds but also considerable complexity.

According to USA Rice Federation, in April 2023, the Office of the US Trade Representative filed its second “counter notification” on India’s rice and wheat subsidies to the WTO Committee on Agriculture, co-sponsored by Australia, Canada, Paraguay, Thailand, and Ukraine. The counter-notification estimated that if India correctly calculated the level of support provided to rice farmers through domestic subsidies, it would be at 78.6 percent of market value in 2014/15, rising to 93.9 percent in 2020/21—far exceeding the 10 percent limit India agreed to when it joined the WTO.

World Grain reported in November 2024 that the United States, Argentina, Australia, Canada, and Ukraine submitted yet another counter-notification demonstrating through India’s own data that its support level “far exceeds” the 10 percent limit for marketing years 2021-22 and 2022-23. The countries argued that “India’s wheat support schemes incentivize overproduction and discourage farmers from growing other crops,” leading to “massive public stocks of wheat that the Indian government has at times dumped onto international markets.”

A January 2023 letter from 18 US senators to Secretary of Agriculture Tom Vilsack and US Trade Representative Katherine Tai, reported by Farm Progress, stated that “the Indian government is subsidizing more than half of the value of production for rice and wheat, instead of the 10% allowable under World Trade Organization rules.” The letter noted that in October 2022, India announced an additional $3.8 billion to fertilizer companies, with total fertilizer subsidies exceeding $20 billion for the first time.

US Wheat Associates noted in August 2024 that “while India is limited to providing 10% support for crop inputs under its WTO agreement, the government subsidizes half the total cost of wheat and rice production and recently announced a massive new subsidy for fertilizer.”

Bobby Hanks, Louisiana rice miller and chair of USA Rice’s International Trade Policy Committee, told USA Rice Federation: “India makes up nearly half of global rice trade and much of its exported rice benefits from the government-established floor price, and then exported at low prices, distorting trade.”

India’s Defense: The Bali Peace Clause

India has not denied providing substantial agricultural support but has invoked what’s known as the “Bali Peace Clause” to shield itself from WTO dispute settlement challenges. According to Farmonaut and Open Access Government, India admits to over-subsidization at the WTO but claims its mass procurement of rice and subsidies are for domestic food security only and don’t result in trade distortion.

In April 2020, India became the first country to invoke the peace clause for breaching the subsidy limit for rice for marketing year 2018-19. India informed the WTO that the value of its rice production was $43.67 billion in 2018-19 and it had given subsidies worth $5 billion.

India argued that “rice stocks sold in the domestic market were not allowed for exports thus preventing the risk of distorting the global market,” and that “an adequate buffer stock of food grains helps deal with fluctuations in production and meet unforeseen exigencies and natural calamities.”

However, the European Union, United States, Japan, Canada, Brazil, and Paraguay questioned India for invoking the peace clause, with the EU asking for all information on products covered by the public stockholding program to ensure only rice support exceeded limits, according to BYJU’S.

World Grain reported in July 2022 that the United States, Australia, Canada, Japan, Paraguay, Thailand, and Uruguay initiated consultations with India focusing on its invocation of the peace clause. The Bali Peace Clause “gives India the ability to build government stocks of food but also stipulates that WTO members cannot export those subsidized government stocks to the extent that it distorts global trade.”

The Shield and the Sword: India’s Protectionist Measures

Here’s where the accusations of hypocrisy gain traction: Even as India invokes food security to justify massive subsidies for domestic rice production, it has simultaneously imposed significant restrictions on rice exports—measures that appear to contradict claims that subsidies don’t affect global trade.

According to Open Access Government, in September 2022, the Indian government announced major export curbs including “an all-out ban on broken rice exports along with a 20% export tariff on non-basmati and non-parboiled long grain rice shipments.” These restrictions followed “India’s bans earlier on wheat and sugar exports that resulted in extreme price fluctuations, further exacerbating the impacts of inflation on global food prices.”

The publication noted that these protectionist measures “to protect India in the short term will have long-lasting impressions, and the growing coalition of countries signing onto consultations at the WTO shows that the rest of the world is watching.”

This creates an apparent contradiction: If India’s subsidies are purely for domestic food security and don’t distort trade, why impose export restrictions? If production is so heavily subsidized that it creates surpluses, doesn’t restricting those exports constitute using subsidized production as a trade weapon?

The Indian Industry Responds

Dev Garg, vice president of the Indian Rice Exporters Federation (IREF), told American Bazaar Online: “The Indian rice export industry is resilient and globally competitive. While the U.S. is an important destination, India’s rice exports are well-diversified across global markets. The Federation, in close coordination with the Government of India, continues to deepen existing trade partnerships and open new markets for Indian rice.”

IREF noted that “evidence from retail markets indicates that most of the tariff burden has been passed on to U.S. consumers, as reflected in higher retail pack prices, while export realizations for Indian farmers and exporters have remained broadly stable.”

Indian News Network reported that IREF emphasized Indian rice consumption in the U.S. “is largely driven by ethnic communities, particularly those from the Gulf and South Asian regions, where dishes like biryani rely heavily on Basmati rice.” The Federation noted that “Indian rice possesses unique qualities, such as aroma, elongation, and texture, which are not replicated by US-grown varieties.”

The Tariff Reality

Trump’s threat comes against a backdrop of already steep tariffs. According to American Bazaar Online and BLiTZ, in 2025 the U.S. under Trump imposed sweeping tariffs on Indian exports. The measures began with a “reciprocal” tariff originally set at 26 percent, later formalized as 25 percent by mid-year. Then in August, the U.S. added a further 25 percent “penalty” tariff linked to India’s continued imports of Russian oil, effectively bringing tariffs on many Indian goods to 50 percent.

Indian News Network reported that “prior to the latest tariff adjustment, Indian rice imports faced a 10% tariff, which has now escalated to 50%. Despite this, export levels have remained steady, highlighting the fundamental importance of Indian rice to American consumers.”

Business Standard noted that Trump’s comments “come at a time when the U.S. economy remains strained” with “American farmers, who are one of Trump’s core constituents, have also been struggling with higher input costs and tougher market conditions, pressures that have been linked to tariff measures.”

Multiple analysts suggest that further rice tariffs would hurt American consumers more than Indian exporters. Indian News Network reported that “market analysts observe that the burden of increased tariffs has primarily fallen on U.S. consumers, as evidenced by rising retail prices, while Indian exporters have maintained stable revenue.”

The Verdict: Dumping or Not?

So is India actually “dumping” rice in the American market while shielding its own agricultural sector?

The answer is complex:

Evidence supporting U.S. concerns:

• Multiple WTO counter-notifications demonstrate India’s agricultural subsidies far exceed agreed limits
• India invokes the Bali Peace Clause to shield itself from dispute settlement while continuing massive support
• India has imposed export restrictions even while claiming subsidies are purely for domestic food security
• The scale of India’s subsidies—potentially 78-94 percent of production value versus the 10 percent limit—is substantial
• Fertilizer subsidies exceeding $20 billion suggest comprehensive government support for rice production

Evidence contradicting dumping claims:

• U.S. rice imports from India represent only 3-5 percent of India’s total rice exports
• Most Indian rice to the U.S. is premium basmati, not the commodity rice U.S. farmers produce
• Indian rice has unique characteristics (aroma, elongation, texture) not replicated by U.S. varieties
• Consumption is driven primarily by ethnic communities for whom Indian rice is culturally essential
• Despite 50 percent tariffs, demand remains steady, suggesting price isn’t the only factor
• The U.S. itself provides substantial agricultural support to its farmers through various programs

The Uncomfortable Middle Ground:

India almost certainly violates the letter of WTO subsidy limits while invoking technicalities to avoid consequences. Its combination of massive domestic support, periodic export restrictions, and claims that subsidies don’t affect trade strains credibility. American farmers have legitimate grievances about competing against a government-backed agricultural colossus.

However, characterizing this as “dumping”—selling below cost to capture markets—oversimplifies a situation where Indian rice genuinely has competitive advantages in quality, variety, and cultural relevance for key consumer segments. The U.S. imports modest quantities primarily because American consumers want specific Indian rice varieties, not because India is flooding markets with below-cost commodity rice.

Trump’s “they shouldn’t be dumping” comment may resonate politically with struggling American farmers, but the reality is far messier than a simple story of unfair foreign competition. India operates a highly protected, heavily subsidized agricultural sector while simultaneously being the world’s dominant rice exporter—a combination that inevitably creates trade tensions, legitimate WTO concerns, and difficult questions about where food security ends and market manipulation begins.

The rice controversy, ultimately, exposes a fundamental tension in global agricultural trade: Can massive domestic support programs coexist with claims of not distorting international markets? India’s position—that subsidies used to build stocks for food security don’t affect trade even when those subsidized stocks enter export markets—remains the central question. Trump’s tariff threats won’t resolve that question, but they’ve certainly brought it back to the forefront of U.S.-India relations.

This story was aggregated by AI from several news reports and edited by American Kahani’s News Desk.