India braces for pain as Trump gives 24-hour warning on tariffs
Trump's harsh language — calling India's economy 'dead,' its tariff barriers 'obnoxious' and its people indifferent to the plight of Ukrainians — has been akin to a verbal slap in the face, according to an official in New Delhi said, who asked not to be identified as the discussions are private. Officials have no template to deal with these kinds of public assaults, the person said, adding that the latest turn of events has put a strain on India's relationship with the US.
Trump said Tuesday he'll increase the 25% tariff on Indian exports to the US 'substantially over the next 24 hours,' citing the Asian nation's high barriers to trade and its purchases of Russian oil. India was 'fueling the war machine, and if they're going to do that, I'm not going to be happy,' Trump told CNBC.
India's government is now bracing for higher tariffs and seeking to limit the possible economic damage. Prime Minister Narendra Modi has been urging Indians to buy more local goods to offset any slump in global demand. The Ministry of Commerce and Industry is discussing ways to help exporters who would be hardest hit, such as in the gems and jewelry and textile sectors. And officials say they will continue to seek back-channel talks to help ease the tensions.
India has been a target of Trump for weeks now because of its economic ties with Russia. The US president has given Vladimir Putin until Aug. 8 to reach a truce with Ukraine, and wants to ramp up the pressure by targeting energy purchases from countries like India and China that are helping to keep Russia's economy afloat.
Modi's government is so far holding its ground, saying it's being unreasonably targeted by the US for its ties to Russia — its biggest supplier of oil and military equipment. Officials have signaled they won't instruct refiners to halt Russian crude purchases.
For months, Indian trade officials had been negotiating with the Trump administration on a deal that both sides said was close to being finalized, with a tariff rate possibly below 20%. The US president's tone appeared to change last month, when he threatened India with higher duties alongside others in the BRICS bloc of nations for what he said was the group's anti-US stance. He then followed up several days later with warnings about financial penalties on countries like India for buying oil from Russia.
India has been buying Russian crude at a rate of about 1.7 million barrels a day so far this year, all of it from seaborne imports, while China has purchased an average of about 2 million barrels, comprising both seaborne imports as well as oil transported via an inland pipeline.
To offset the tariff hikes, officials in New Delhi are now considering expediting an export promotion plan, first outlined in the February budget, which set aside 22.5 billion rupees ($256 million) to support exporters. The budgeted amount may be increased to help businesses offset potential losses resulting from greater competition with regional rivals, who have secured lower tariff rates of around 15%-20%, a person familiar with the matter said.
The discussions are still ongoing and the government hasn't made any decision on what kind of support it will provide, the person said.
India's Ministry of Commerce and Industry and Ministry of Finance didn't immediately respond to emails seeking further information.
New Delhi is also weighing easing some dairy market access rules for the US in order to placate Trump, officials familiar with the matter said. The government is discussing whether it can allow limited imports of some dairy products, such as cheese not made in India and condensed milk with clear labeling of the animal feed used in manufacturing, they said.
India maintains tariffs of as high as 60% on dairy products to protect its local industry and enforces strict rules to ensure imported dairy goods aren't from cattle fed with animal-based products in order to adhere to religious sensitivities. Any easing of restrictions in the dairy sector would represent a significant concession by India, which didn't grant the UK any similar market access in a recently concluded free trade agreement.
Economists estimate that a 25% tariff could cut India's gross domestic product growth by 0.3 percentage point. Pranjul Bhandari, chief India economist at HSBC Holdings Plc., said an additional penalty would curb growth further, resulting in lower capital inflows and investment. An internal assessment by the Ministry of Commerce and Industry shows that a 25% tariff would impact about 10% of India's exports in the July-to-September period.
Modi's rivals have criticized his previously friendly relationship with Trump and called him out for his silence on the US leader's comments.
'We are receiving threats — that there will be more than 25% tariffs and we are being told that we should not buy oil from Russia. This friendship has turned out to be expensive,' Jairam Ramesh, a senior leader in the main opposition Indian National Congress, told reporters Tuesday.
#WATCH | On US President Trump saying he will substantially raise tariffs on India over Russian oil purchases, Congress MP, Jairam Ramesh says, '…For years, PM has been claiming that President Trump and he share a special bond…This friendship proved to be very expensive…MEA… pic.twitter.com/yBPzxFrOmQ
— ANI (@ANI) August 5, 2025
Trump's actions will push India to react, although it's unlikely to retaliate and will more likely seek further talks with the US, said Indrani Bagchi, chief executive officer at Ananta Centre, a Delhi-based research group.
'My sense is the government will contain this and will not take this forward, will not escalate,' she said. India will want to continue the trade deal negotiations in spite of Trump's 'personal anger,' she said.
The US president likely wants to have Modi call him and 'fold in the way that other countries have,' she said. 'That is not India's style.' –BLOOMBERG
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