Trump Slams India With 25% Tariff, Ties Plummet

Escalation of U.S.-India Tensions Over Tariffs

U.S. President Donald Trump has taken a significant step in escalating tensions with India by issuing an executive order that imposes an additional 25% tariff on Indian goods. This move is primarily aimed at addressing New Delhi's continued imports of Russian oil, marking a sharp increase in trade friction between the two nations. The new measure raises tariffs on certain Indian goods to as high as 50%, which is among the highest faced by any U.S. trading partner.

This decision is expected to have a substantial impact on key Indian export sectors such as textiles, footwear, and gems and jewelry. It represents the most serious downturn in U.S.-India relations since Trump returned to office in January. The timing of this action is also notable, as it coincides with Indian Prime Minister Narendra Modi's upcoming first visit to China in over seven years. This suggests a potential realignment of alliances as ties with Washington become more strained.

India's external affairs ministry responded to the new tariffs by stating, "India will take all actions necessary to protect its national interests." The ministry expressed disappointment, noting that the U.S. chose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest. They emphasized that India’s imports are based on market factors and aimed at ensuring energy security for its population of 1.4 billion.

Trade analysts have warned that these tariffs could severely disrupt Indian exports. The additional 25% tariff comes into effect 21 days after August 7, according to the order. Madhavi Arora, an economist at Emkay Global, stated, "With such obnoxious tariff rates, trade between the two nations would be practically dead."

Indian officials have privately acknowledged growing pressure to return to the negotiating table. A potential compromise could involve a phased reduction in Russian oil imports and diversification of energy sources. A senior Indian official mentioned that New Delhi was caught off guard by the sudden imposition of the new levy and the steep rate, as both countries continue to discuss trade issues.

Trump’s decision follows five rounds of inconclusive trade negotiations, which stalled over U.S. demands for greater access to Indian agriculture and dairy markets. India’s refusal to curb Russian oil purchases — which surged to a record $52 billion last year — ultimately triggered the tariff escalation.

Garima Kapoor, an economist at Elara Securities, noted, "Exports to the U.S. become unviable at this rate. Clearly, risks to growth and exports are rising, and the rupee may face renewed pressure." She added that calls for fiscal support are likely to intensify.

While Trump’s executive order does not mention China, which also buys Russian oil, a White House official had no immediate comment on whether an additional order covering those purchases would be forthcoming. U.S. Treasury Secretary Scott Bessent recently warned Chinese officials that continued purchases of sanctioned Russian oil would lead to big tariffs due to legislation in Congress. However, he was told that Beijing would protect its energy sovereignty.

The U.S. and China have been engaged in discussions about trade and tariffs, with an eye to extending a 90-day tariff truce that is set to expire on August 12. At that point, their bilateral tariffs are expected to shoot back up to triple-digit figures.