Trump imposes 25% tariff on India over energy purchases from Russia
US President Donald Trump on Wednesday unexpectedly announced a 25% tariff on India, along with an unspecified additional penalty, to punish the country for making energy purchases from Russia, launching a broadside against ongoing bilateral trade talks. The levies take effect August 1, he said. India said it’s studying the implications of the announcement.The US President’s shock statement came as a team of US trade negotiators is preparing to visit India next month for further talks for the proposed bilateral trade agreement (BTA), the first part of which is to be concluded by October. He blasted India’s purchases from Russia, switching case midway to amplify the message. 
“They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine — All things not good! India will therefore be paying a tariff of 25%, plus a penalty for the above, starting on August first,” he posted on Truth Social. Later in the day, Trump said the US was negotiating with India.“They have one of the highest tariffs in the world now, they’re willing to cut it very substantially. But we’ll see what happens... You’ll know by the end of this week,” Trump told reporters. India asserted in a statement that the government will “take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest Comprehensive Economic and Trade Agreement with the UK.”The Indian statement was issued after a high-level meeting, convened soon after Trump issued his statement. The meeting was attended by top government officials, including commerce and industry minister Piyush Goyal and external affairs minister S Jaishankar. The punitive duty could significantly dent India’s goods exports of $85 billion to the US, economists said. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months and “we remain committed to that objective,” the government statement read.“The government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs and MSMEs.”Trump, describing India as a “friend,” said the US has done relatively “little business” with the country because of its high tariffs. “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,” Trump said in the post. His announcement comes ahead of the August 1deadline he set for imposing reciprocal tariffs, which had been paused for 90 days, on many trading partners.Twists and turns India has hardened its position on the US demand for duty concessions on agricultural and dairy products. It has not given any duty concessions in the dairy sector in any free trade agreement. A person familiar with the matter said Trump’s statement was a pressure tactic to secure deeper concessions. The Indian and US teams concluded the fifth round of talks on the agreement last week in Washington. A bilateral trade agreement (BTA) is under negotiation, announced by Prime Minister Narendra Modi and Trump in February, to more than double bilateral trade to $500 billion by 2030.Impact India’s shrimp, textiles, gems and jewellery, toys and engineering exports could be the most hit by the higher tariffs, as the US accounts for about 18% of India's total goods exports. The US is the largest market for the domestic shrimp industry. Ecuador and Indonesia are major competitors for the US market. India’s total goods exports to the US were $86.5 billion in FY25. New Delhi’s exports in key sectors such as gems and jewellery, and apparel are also likely to be hit by the additional tariffs. Ficci president Harsha Vardhan Agarwal said the lobby group “is disappointed by the decision taken by the US to levy a 25% tariff on exports from India and impose secondary sanctions.” Agarwal said the move was unfortunate and will have a bearing on India’s exports. “We hope this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon,” he said.
“They have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine — All things not good! India will therefore be paying a tariff of 25%, plus a penalty for the above, starting on August first,” he posted on Truth Social. Later in the day, Trump said the US was negotiating with India.“They have one of the highest tariffs in the world now, they’re willing to cut it very substantially. But we’ll see what happens... You’ll know by the end of this week,” Trump told reporters. India asserted in a statement that the government will “take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest Comprehensive Economic and Trade Agreement with the UK.”The Indian statement was issued after a high-level meeting, convened soon after Trump issued his statement. The meeting was attended by top government officials, including commerce and industry minister Piyush Goyal and external affairs minister S Jaishankar. The punitive duty could significantly dent India’s goods exports of $85 billion to the US, economists said. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months and “we remain committed to that objective,” the government statement read.“The government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs and MSMEs.”Trump, describing India as a “friend,” said the US has done relatively “little business” with the country because of its high tariffs. “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,” Trump said in the post. His announcement comes ahead of the August 1deadline he set for imposing reciprocal tariffs, which had been paused for 90 days, on many trading partners.Twists and turns India has hardened its position on the US demand for duty concessions on agricultural and dairy products. It has not given any duty concessions in the dairy sector in any free trade agreement. A person familiar with the matter said Trump’s statement was a pressure tactic to secure deeper concessions. The Indian and US teams concluded the fifth round of talks on the agreement last week in Washington. A bilateral trade agreement (BTA) is under negotiation, announced by Prime Minister Narendra Modi and Trump in February, to more than double bilateral trade to $500 billion by 2030.Impact India’s shrimp, textiles, gems and jewellery, toys and engineering exports could be the most hit by the higher tariffs, as the US accounts for about 18% of India's total goods exports. The US is the largest market for the domestic shrimp industry. Ecuador and Indonesia are major competitors for the US market. India’s total goods exports to the US were $86.5 billion in FY25. New Delhi’s exports in key sectors such as gems and jewellery, and apparel are also likely to be hit by the additional tariffs. Ficci president Harsha Vardhan Agarwal said the lobby group “is disappointed by the decision taken by the US to levy a 25% tariff on exports from India and impose secondary sanctions.” Agarwal said the move was unfortunate and will have a bearing on India’s exports. “We hope this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon,” he said.
economictimes
