Donald Trump, on Wednesday night, announced an additional 25% tariff on Indian imports as a “penalty” for New Delhi’s continued purchase of crude oil from Russia.
He also warned that similar punitive measures would be taken against other countries that directly or indirectly buy oil from Moscow and contribute to cash-strapped Vladimir Putin’s ongoing war in Ukraine.
This latest escalation by Trump brings total U.S. import duties on Indian goods to 50%, making them 20% higher than those imposed on China and 31% more than the tariffs on Pakistan.
The newly introduced penalty tariff is set to take effect in 21 days.
In an executive order signed earlier in the day, Trump wrote, “I find that the Government of India is currently, directly or indirectly, importing oil from the Russian Federation… and, in my judgment, I have determined it necessary to impose an ad valorem duty on imports of articles from India…”
Trump Criticises India
The move comes shortly after Trump made scathing remarks about India-U.S. trade relations. Speaking to a U.S. broadcaster, he said, “India has not been a good trading partner… we settled on 25%… but I think I’m going to raise that substantially over the next 24 hours because they’re buying Russian oil.”
Such comments, along with others in a similar tone, risk severely damaging ties between two of the world’s largest economies, potentially reshaping the global geopolitical and security order. Analysts suggest that this may push India closer to Russia, Brazil, and even China, all members of the BRICS grouping.
The shift in dynamics has also been highlighted by Trump’s sudden tariff cut for Pakistan—now down to 19%—alongside the signing of a new trade deal that includes plans for the development of Pakistan’s domestic oil reserves.
On July 30, Trump issued a directive that India would face a 25% tariff in addition to a still-unspecified penalty for continuing to purchase Russian oil and military hardware.
Trump’s Reciprocal Tariffs
That announcement came just two days before the expiry of a deadline Trump had set for applying “reciprocal tariffs” to several U.S. trading partners, a policy initially announced in April but suspended to allow negotiations.
Trump also railed against what he termed India’s “strenuous and obnoxious non-monetary trade barriers,” adding, “India is our friend (but) over the years, we’ve done relatively little business with them because their tariffs are far too high—among the highest in the world. And they have the most strenuous and obnoxious non-monetary trade barriers of any country.”
Responding to Trump’s barrage of criticism, the Indian government noted that several Western countries—including the U.S. itself—continue to engage in commerce with Russia.
New Delhi explained its reliance on Russian oil as “a necessity compelled by the global market situation,” contrasting this with countries criticising India while continuing to import non-essential goods from Russia.
The government pointed out that the European Union had purchased €67.5 billion worth of liquefied natural gas (LNG) from Russia in 2024 alone.
Escalating Friction
India-U.S. trade relations have been under increasing strain in recent months.
The escalating friction comes as the two sides struggle to finalise a comprehensive trade agreement—talks for which began in December last year under the then-President Joe Biden.
The deal would have slashed tariffs on Indian exports to the U.S., but negotiations have since stalled. India has resisted American demands for wider market access, especially for U.S. agricultural products, citing the price-sensitive nature of its domestic farm economy.
This impasse prompted Trump to accuse New Delhi of being a “very big tariff abuser.”
Despite these rising tensions, Indian government sources said last week that the 25% tariff hike would have a “negligible” effect on India’s economy.
According to those officials, the GDP impact is unlikely to exceed 0.2%—a view echoed by an India-based economist who told Bloomberg that the expected GDP slowdown would be around 0.3%.
However, those estimates were based solely on the initial 25% reciprocal tariff and did not account for the added penalty announced on Wednesday.
(With inputs from IBNS)
