• Trump slaps another 25pc on New Delhi, taking rate to a whopping 50pc
• New import tax to take effect in three weeks, threatens exports worth $87bn; textile, footwear, gems and jewellery sectors hit
• India rejects tariffs as ‘unjustified’, vows to protect national interests; Rahul Gandhi calls it ‘economic blackmail’
WASHINGTON: US President Donald Trump on Wednesday imposed an additional 25 per cent tariff on Indian goods, citing New Delhi’s continued imports of Russian oil in a move that sharply escalated tensions between the two nations after trade talks reached a deadlock.
The new import tax, set to come into place in three weeks, will raise duties on some Indian exports to as high as 50pc — among the highest levied on any US trading partner.
Trump’s executive order imposing the extra tariff did not mention China, which also imports Russian oil. A White House official had no immediate comment on whether an additional order covering those purchases would be forthcoming.
Analysts said Mr Trump’s move marks the most serious downturn in US-India relations since his return to office in January. The tariffs threaten to disrupt India’s access to its largest export market, where shipments totalled nearly $87 billion in 2024, hitting sectors like textiles, footwear, gems and jewellery.
It also marks a shift from the warm ties seen during Mr Trump and Indian Prime Minister Narendra Modi’s February meeting, they said, pointing out Mr Trump’s recent remarks calling India’s economy “dead”, its trade barriers “obnoxious” and accusing the country of profiting from cheap Russian oil while ignoring the killings of Ukrainians in Russia’s three-and-a-half-year-old invasion of its neighbour.
India’s foreign ministry, usually shy of even contradicting the US, let alone challenging it, was forthright, calling the decision extremely unfortunate and noting that many other countries are also importing Russian oil in their national economic interest.
“India will take all necessary steps to protect its national interests,” it said, adding that purchases were driven by market factors and the energy needs of India’s 1.4 billion people.
Additionally, Mr Modi’s National Security Adviser Ajit Doval was due in Moscow on Wednesday to discuss President Vladimir Putin’s visit to New Delhi later in the year. Reports said he would also discuss the new US tariffs on Russian oil trade with India. The Kremlin described Mr Trump’s threats as “attempts to force countries to stop trade with India”.
The development comes as Mr Modi prepares for his first visit to China in over seven years, suggesting a potential realignment in alliances as relations with Washington fray.
Oil prices edged up about 1pc on Wednesday after falling to a five-week low in the prior session after Mr Trump penalised India for buying Russian oil and in light of a larger-than-expected US crude storage draw last week.
Last week, US Treasury Secretary Scott Bessent warned China that continued Russian oil purchases could trigger new tariffs, as Washington prepares for the expiry of a US-China tariff ceasefire on Aug 12.
Blow to Indian exports
Trade between the United States and India — the world’s biggest and fifth-largest economies, respectively — is worth over $190 billion.
Exporters and trade analysts warn that the tariffs — which Trump casts as a driver to reduce US trade deficits and reinvigorate domestic manufacturing — could severely disrupt Indian exports.
“This is a severe setback. Nearly 55pc of our shipments to the US will be affected, said S.C. Ralhan, president of the Federation of Indian Export Organisations.
The increased duties place Indian exporters at a 3,035pc disadvantage versus trade rivals in Vietnam, Bangladesh and Japan.
With such obnoxious tariff rates, trade between the two nations would be practically dead, said Madhavi Arora, economist at Emkay Global.
Indian officials acknowledged pressure to return to negotiations with the Trump administration. A phased cut in Russian oil imports and diversification could be a part of the compromise.
“We still have a window,” said a senior Indian official, requesting anonymity. The fact that the new tariffs take effect in 21 days signals the White House is open to talks.
Another official said there were no immediate plans for Modi or senior leaders to travel to Washington, nor were any retaliatory measures being considered.
Instead, the government is weighing relief for exporters, including interest subsidies and loan guarantees.
A sharp drop in US-bound shipments could drag India’s GDP growth below 6pc this year, down from the central bank’s 6.5pc forecast, said Sakshi Gupta of HDFC Bank.
India’s rupee weakened in the offshore non-deliverable forwards market while stock futures fell marginally after the announcement.
‘Economic blackmail’
Rahul Gandhi, leader of the opposition in the Indian Lok Sabha, insisted that the 50pc tariffs on Indian goods are “economic blackmail” to bully India into an unfair trade deal.
Soon after Mr Trump announced a penalty of another 25pc on India for buying Russian oil, the former Congress president said the prime minister should not let Indian interests be overridden.
“PM Modi better not let his weakness override the interests of the Indian people,” Mr Gandhi said in a post on X.
The Hindu carried an analysis showing that Mr Trump’s criticism of India for its oil and arms trade with Russia, while factually correct, allegedly lacks logic.
“India and China are not the only countries that continued purchasing energy from Russia after the Ukraine war began. In fact, data shows that the European Union’s energy imports from Russia have been higher than India’s during the war,” the newspaper said.
Moreover, while India has increased its oil imports from Russia in recent years, many EU countries — particularly the Netherlands — have been importing large volumes of petroleum products from India.
Further, the US continues to import a variety of goods, especially fertilisers, from Russia.
“Singling out a few countries for directly buying oil, while not putting the others who benefit indirectly in the same pedestal, defies logic,” the analysis said.
