WASHINGTON: US President Donald Trump has ordered an additional 25% tariff on Indian goods in response to New Delhi’s continued purchases of Russian oil, marking the steepest downturn in bilateral trade ties since his return to the White House.
The new levy, set to take effect in three weeks, is in addition to a separate 25% duty taking force on Thursday, according to an executive order released by the White House. The order also warns of potential penalties on other nations “directly or indirectly importing” Russian oil.
Certain categories, such as steel, aluminium, and pharmaceuticals, remain exempt due to separate sector-specific measures. The White House defended the move as “necessary and appropriate.”
India Condemns Decision
India’s foreign ministry called the measure “extremely unfortunate” and vowed to take all necessary steps to safeguard its national interests.
“Our imports are driven by market factors and aimed at ensuring the energy security of 1.4 billion people,” the ministry said, adding it was “unjustified” to single out India for actions many other countries were also taking.
The decision comes as Washington steps up pressure on India to scale back Russian oil imports. Trump had earlier threatened new sanctions on Moscow if it failed to advance peace talks with Kyiv.
Coinciding with the announcement, India’s national security adviser visited Moscow, while US envoy Steve Witkoff was in New Delhi.
Economic Impact
Economists warn the new tariffs could push duties on Indian exports to the US as high as 50%, hitting sectors such as textiles, footwear, and gems. India exported US$87 billion worth of goods to the US in 2024, and nearly 55% of those shipments could be affected, said S.C. Ralhan, president of the Federation of Indian Export Organisations.
The move follows five failed rounds of trade talks, stalled over US demands for greater access to India’s agriculture and dairy markets, and New Delhi’s record US$52 billion in Russian oil imports last year.
While the tariffs take effect 21 days after Aug 7, Indian officials believe there is still room for negotiation, possibly involving phased cuts in Russian oil purchases.
No Immediate Retaliation
India has not announced countermeasures but is considering domestic relief for exporters, such as loan guarantees and interest subsidies. Analysts warn a sharp drop in exports to the US could drag GDP growth below 6% this year, compared to the central bank’s 6.5% forecast.
Markets reacted cautiously, with the rupee weakening in offshore forwards and equity futures slipping.
China Spared
Despite also importing Russian oil, China was not targeted by the new tariffs. The US and China are currently engaged in trade negotiations, with Washington imposing a 30% duty on Chinese goods and Beijing responding with a 10% levy on US products.
The development could alter India’s strategic direction, with Prime Minister Narendra Modi preparing for his first visit to China in over seven years.
Oil prices rose about 1% on Wednesday, lifted by the tariff news and a larger-than-expected US crude drawdown.
