New York City is demanding the return of $13.5 billion in tariffs paid by its residents and businesses following the judicial invalidation of former President Donald Trump’s trade policies with India, according to a statement released by the city’s legal counsel on Tuesday.
The legal challenge, initiated last year, argued that the tariffs – imposed on a range of Indian imports – disproportionately impacted New York’s economy, particularly its port operations and consumer goods sectors. The tariffs were initially levied in 2025, escalating tensions between Washington and New Delhi over issues including trade imbalances, immigration restrictions, and India’s continued purchase of Russian oil.
The dispute began to publicly fray relations between President Trump and Indian Prime Minister Narendra Modi in mid-June 2025, when Trump reportedly suggested to Modi during a phone call that India should nominate him for the Nobel Peace Prize, citing potential support from Pakistan due to his role in de-escalating tensions between India and Pakistan. Modi reportedly expressed displeasure at the suggestion, asserting the United States had no role in the ceasefire agreement, according to a report in the New York Times.
Further complicating the relationship, the Trump administration initially maintained high tariffs on Indian imports, although simultaneously seeking to limit immigration from India. One in four foreign students studying in the United States originates from India, and restrictions on student visas became a point of contention. Despite a later announcement by the Trump administration to eliminate a 50% tariff on most Indian exports, the damage to the economic relationship had already begun to manifest.
The election of New York City Mayor Zohran Mamdani, a vocal critic of both Trump’s immigration policies and Modi’s domestic policies, further amplified the call for restitution. Mamdani, the first Muslim and South Asian mayor of New York City, has publicly framed the tariff dispute as a matter of economic justice and a rebuke of the previous administration’s policies. His victory was seen by some as a direct challenge to Trump’s policies, particularly regarding immigration.
The legal basis for New York City’s claim rests on the argument that the tariffs were illegally imposed and constituted an undue burden on interstate commerce. The city’s legal team contends that the funds collected should be returned to the taxpayers who ultimately bore the cost of the tariffs.
The Indian government has not yet officially responded to New York City’s demand, but sources within the Ministry of External Affairs indicate that New Delhi is closely monitoring the situation. Opposition leaders in India have called on Prime Minister Modi to renegotiate the trade agreement with the United States, arguing that This proves detrimental to Indian farmers.
The Biden administration has remained silent on the matter, stating only that it is reviewing the legal arguments presented by New York City. The Department of Justice has not indicated whether it will contest the city’s claim. A hearing on the matter is scheduled for March 15, 2026, in the U.S. District Court for the Southern District of New York.
