Trump hits India with additional 25% tariff: Breaking down US' latest move against New Delhi
additional 25% tariff
on Indian goods over its purchase of Russian energy, the
White House
said Wednesday, hours after talks between Washington and Moscow over the war in Ukraine failed to yield a breakthrough.
The new levy — which will stack on top of a 25% country-specific tariff set to be implemented overnight — will take effect within 21 days, according to an executive order signed by Trump.
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'They're fueling the war machine. And if they're going to do that, then I'm not going to be happy,' Trump said Tuesday in an interview with CNBC, referring to India's purchases of Russian energy.
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Trump doubles tariff on India to 50% over Russian oil purchase
The move threatens to further complicate U.S.-Indian relations and comes shortly after an Indian government source said Prime Minister Narendra Modi would visit China for the first time in over seven years later this month.
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In tariff rankings, India now matches Brazil at the top with 50 per cent, followed by Switzerland at 39 per cent, Canada and Iraq at 35 per cent, and China at 30 per cent.
US' latest attack
India's importation of Russian Federation oil undermines U.S. efforts to counter Russia's harmful activities, said a statement by the White House.
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India will take actions necessary to protect national interests: MEA reacts to Trump's 'unfair' 25% additional tariff
India's subsequent reselling of this oil on the open market, often at significant profit, further enables the Russian Federation's economy to fund its aggression, it added.
'By imposing a 25% tariff, President Trump aims to deter countries from supporting the Russian Federation's economy through oil imports and impose serious economic consequences on the Russian Federation for its ongoing aggressions.'
Exempted items
Exemptions remain in place for items already covered by sector-specific tariffs, including steel and aluminium, as well as potentially affected categories like pharmaceuticals.
Today's order decoded by experts
At 50% rate, many Indian exports will face a handicap versus countries that are in the 15-30% bucket, said A. Prasanna, chief economist, ICICI Securities Primary Dealership, Mumbai.
'While Trump's order gives another 21 days for a deal to breakthrough, in case it does not we will have to significantly lower FY26 GDP growth forecast to below 6%, baking in a 40-50 bps hit. This would be double our earlier estimates (of GDP hit from higher tariffs),' Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram told Reuters.
The pressure is mounting on India to come to a trade agreement. India may agree to significantly reduce Russian purchases over a phased manner and diversify to other sources, stated Teresa John, lead economist, Nirmal Bang Institutional Equities, Mumbai.
New Delhi's stance:
Indian officials have hit back, accusing the US and Europe of double standards. In a blistering response, the Ministry of External Affairs (MEA) earlier said: 'It is unjustified to single out India… The very nations criticizing India are themselves indulging in trade with Russia.'
Who is saying what?
Trump: 'India's economy is dead... they're buying massive amounts of Russian oil and reselling it for big profits.'
The MEA: 'India will take all necessary measures to safeguard its national interests and economic security.'
Eric Garcetti (former US ambassador): 'India bought Russian oil because we wanted somebody to buy Russian oil at a price cap… It was the design of the policy.'
Ashok Malik, the Asia Group: 'Fast and loose statements are putting 25 years of bipartisan effort at risk.'
Indrani Bagchi, Ananta Centre: 'Trump wants Modi to call and fold. That's not India's style.'
India-US ties facing crisis
U.S.-India ties are facing their most serious crisis in years after talks with India failed to produce a trade agreement.
Trump has escalated his fight with India over trade, unilaterally imposing a tariff rate after months of negotiations failed to secure a deal. He accused New Delhi of refusing to ease access for American goods and criticised its membership in the BRICS group of developing economies.
Despite the volatility, New Delhi is not looking to escalate. Instead, it's working behind the scenes on a multi-pronged strategy to contain economic fallout and stabilize relations.
1. No subsidies - but sectoral support
Commerce minister Piyush Goyal met exporters and ruled out direct subsidies, but floated other 'innovative' measures:
Banks may recalibrate risk models to reduce borrowing costs for MSMEs.
The government could cut testing and certification fees for small firms.
An Export Promotion Mission with additional funding is on the table.
According to EEPC India, engineering exports alone may drop $4–5 billion under the current tariffs. The textile sector fears closure of units and job losses.
'Some American buyers say they'll buy from Chinese suppliers despite higher tariffs because they're more cost-competitive,' said Sudhir Sekhri, AEPC chairman.
2. Dairy diplomacy & import trade-offs
As per a Bloomberg report, in a significant policy shift, India may offer limited market access in dairy - a long-standing US demand. Officials are exploring options to import:
Cheese not produced in India
Condensed milk - with labeling confirming plant-based feed (to respect Indian religious sensitivities)
This would mark a major concession, especially since India denied similar access to the UK in its free trade talks.
3. Strategic messaging to the West
India has reframed its Russian oil purchases not as defiance, but necessity:
Global oil routes shifted after Europe began cornering Gulf supplies.
India's refineries kept global prices stable by purchasing Russian barrels.
New Delhi argues it shouldn't be punished for global realignments it didn't cause - especially when other BRICS countries like China continue similar purchases without facing equivalent penalties.
4. Exporters pivot to branding, niche markets
The government is urging exporters to build strong Indian brands that can weather tariff shocks and reduce dependency on price-sensitive segments.
"It is important for Indian exporters to do brand building and promotion to come out of the clutches of any subsidies amid the US tariffs," a government offical told the ET.
Sectors like marine exports are also being encouraged to propose employment-linked schemes to retain jobs and capacity. A representative from an export promotion council told ET: 'Clients won't shift overnight - Ecuador, for example, lacks scale to replace India in shrimp exports.'
5. Back-channel diplomacy and restraint
The Modi government is keen to avoid public confrontation, even as Trump doubles down on pressure.
National security adviser Ajit Doval and foreign minister S Jaishankar are expected to continue planned visits to Moscow, signaling no policy reversal - but also no inflammatory rhetoric aimed at Washington.
'My sense is the government will contain this... and will not escalate,' said Bagchi.
The goal:
de-escalate quietly, while protecting key sectors and trade ambitions.
Between the lines
Analysts see Trump's threats as both policy and performance. His demands - halt oil from Russia, lower tariffs, and give market access - may be part of a high-stakes negotiation strategy rather than fixed policy.
India is betting on Trump's volatility - hoping it's tactical bluster ahead of the November 2025 US elections, not a permanent break.
But if tariffs stick, it risks upending Modi's narrative of having secured India's global stature and could trigger long-term shifts in India's export map.
(With TOI inputs)
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