President Donald Trump on Wednesday, July 30, announced a 25 percent tariff on all goods coming from India, along with an additional, unspecified penalty for buying Russian crude oil and military equipment.
Effective from August 1, 2025, these measures are attributed to India’s ongoing defence and energy partnerships with Russia. This move by Trump is widely interpreted as both a strategic warning and a shift towards protectionist trade policies.
The announcement by Trump came as a surprise for India as Indian officials yesterday said that a US trade team would visit from August 25 to negotiate a trade deal with Washington.
In a social media post on Wednesday, Trump said, “All things not good! India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August first.”
Trump went on to criticize PM Narendra Modi-led government for long-standing trade practices, calling Indian tariffs “among the highest in the world” and termed the country’s trade polices as “strenuous and obnoxious non-monetary trade barriers.”
The announcement by the US is being seen as a pressure tactic to get New Delhi to agree to demands made by the US, which has, in recent days, got favourable trade deals with major partners like Japan, the UK and the European Union.
The penalty was announced as India has made large oil and military equipment purchases from Russia. India is the first country to face a penalty for imports from Russia. Prior to this, Trump slapped high tariffs on China. However, it refrained from levying any penalty despite Beijing being the largest oil importer of Russia.
Trump said though India is America’s friend, “we have, over the years, done relatively little business with them because their (India) 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”.
He said India has always purchased a significant amount of military equipment and energy products from Russia at a time when everyone wants Russia to stop the “killing” in Ukraine.
US tariffs on India: How India reacted to Trump’s decision
India on Wednesday said that it has taken note of a statement by the US President on bilateral trade and is studying its implications.
A statement issued by the Commerce and Industry Ministry said that 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.
“We remain committed to that objective,” the statement said.
It said the government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs. “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 statement said.
US Tariffs, Russia-linked penalty on India: Impacts on various sectors
The immediate economic consequences of the 25 per cent tariff and Russia-linked penalty on India by the US are expected to be severe and concentrated within specific sectors.
Industries such as automobiles, auto parts, steel, aluminium, smartphones, electronics, marine products, chemicals, gems and jewellery, and various food categories will bear the brunt of the 25 per cent import duty. Conversely, some sectors have been temporarily exempted. Pharmaceuticals, semiconductors, and critical minerals, which are crucial to the trade relationship with the US, are not currently included in the new tariff regime.
Similarly, categories such as cashews, footwear, and specific apparel lines may remain viable, benefiting from comparatively more favourable tariff treatment than their competitors.
