Trump to Impose 25% Tariff on India, Doubling Combined Taxes to 50%

U.S. Imposes Additional Tariffs on Indian Imports from Russia

The United States has taken a significant step in its trade policy by imposing an additional 25% tariff on India for its purchases of Russian oil. This move, signed into effect by President Trump, brings the total tariffs imposed on India to 50%. The new tariffs are set to take effect 21 days after the executive order was signed, potentially giving India and Russia time to negotiate with the administration regarding these import taxes.

This decision could have a major impact on India’s economic trajectory, especially considering that the country was previously seen as a viable alternative to China for American companies looking to relocate their manufacturing operations. While China also purchases oil from Russia, it was not included in the recent executive order issued by the Republican president.

As part of ongoing negotiations with Beijing, Trump has already implemented a 30% tariff on goods from China. However, this rate is lower than the combined import taxes that have been threatened against New Delhi.

Response from India and Trade Experts

Trump had previously hinted at the tariffs during a press briefing, stating that the U.S. held a meeting with Russia on Wednesday as part of efforts to bring an end to the war in Ukraine. He remarked, “We’re going to see what happens,” adding, “We’ll make that determination at that time.”

India’s government reacted strongly to the new tariffs, calling them “unfortunate.” A statement from the Foreign Ministry, released by spokesman Randhir Jaiswal, emphasized that these actions were “unfair, unjustified and unreasonable.” Jaiswal noted that India's imports are based on market factors and aimed at ensuring energy security for its 1.4 billion people.

Ajay Srivastava, a former Indian trade official, highlighted that the latest tariff places India among the most heavily taxed U.S. trading partners. He warned that the tariffs could significantly increase the cost of Indian goods, potentially reducing exports to the U.S. by around 40%-50%.

Srivastava criticized the decision as “hypocritical,” pointing out that China purchased more Russian oil than India did last year. He suggested that Washington avoids targeting Beijing due to China’s leverage over critical minerals essential for U.S. defense and technology.

Economic Implications and Global Context

In 2024, the U.S. recorded a $45.8-billion trade deficit in goods with India, according to the U.S. Census Bureau. American consumers and businesses import pharmaceutical drugs, precious stones, and textiles and apparel from India, among other goods.

India, as the world’s largest country, had become a strategic partner for the U.S. in countering China’s influence in Asia. However, India has not supported the U.S.-led sanctions on Moscow related to the Ukraine conflict, despite expressing a desire for peace.

Currently, the U.S. and China are engaged in trade negotiations, with Washington imposing a 30% tariff on Chinese goods and facing a 10% retaliatory tax from Beijing on American products.

Contradictions in U.S. Policy

The planned tariffs on India contradict previous efforts by the Biden administration and other Group of Seven (G7) nations to encourage India to buy Russian oil at discounted prices through a price cap introduced in 2022. The initiative aimed to limit the Kremlin’s revenue to fund its war in Ukraine, forcing Russia to either sell its oil at a discount or develop an alternative shipping network.

The price cap required shipping and insurance companies to refuse to handle oil shipments above the $60 per barrel threshold. However, Russia has managed to bypass the cap by using a “shadow fleet” of old vessels, along with insurers and trading companies located in countries not enforcing the sanctions.

Despite these challenges, oil prices have remained relatively stable, with a barrel trading at $65.84 on Wednesday morning, marking a 1% increase for the day.

This story was reported by Boak, Roy, and Hussein for the Associated Press, with Roy contributing from New Delhi.