Substantial tariff hike on India in 24 hours: US President Donald Trump

Business Standard

a day ago

With New Delhi still looking to find ways to respond to the White House threats of increasing tariffs on Indian goods, US President Donald Trump on Tuesday issued a fresh warning saying he would raise tariffs 'very substantially' over the next 24 hours because India is buying Russian oil. He termed India as not a good trading partner.
About the trade deal with India that seemed imminent, Trump said the 'sticking point' with India is that its tariffs are too high.
Trump's latest statement on the issue came hours after India's Ministry of External Affairs (MEA) issued a terse statement on Monday evening, where it termed the targeting by the US and the European Union for importing Russian crude unjustified and unreasonable.
Until the Monday evening statement, Indian officials had said New Delhi did not want to publicly engage in a war of words with Trump, preferring to convey its perceptions to the White House behind closed doors. The developments in the past 24 hours have suggested a hardening of stands between the two countries. Addressing a public meeting in Uttar Pradesh on Sunday, Prime Minister Narendra Modi had urged Indians to buy locally manufactured products.
In the midst of its tensions with the Trump administration over trade, official sources in New Delhi have said National Security Advisor Ajit Doval will visit Russia this week, and External Affairs Minister S Jaishankar later this month. The two visits are part of routine India-Russia annual consultations.
This will culminate with the annual summit meeting between Modi and the Russian President with the latter slated to visit India, but are taking place at a crucial juncture in India's ties both with Russia and the US.
In a sign that there may yet be an opportunity to strike a deal before the deadline, Trump's special envoy Steve Witkoff is expected to visit Russia this week, as early as Wednesday.
In an interview to CNBC Squawk Box, Trump said India was 'fuelling the war machine' by buying Russian crude and that he is displeased about it. 'India has not been a good trading partner, because they do a lot of business with us, but we don't do business with them. So we settled on 25 per cent (tariff), but I think I'm going to raise that very substantially over the next 24 hours, because they're buying Russian oil. They're fuelling the war machine. And if they're going to do that, then I'm not going to be happy,' he added.
Asked about the trade deal with India, Trump cited high tariffs by India: 'Now I will say this, India went from the highest tariffs ever, they will give us zero tariffs….But that's not good enough, because of what they're doing with oil.'
A person privy to the talks said that while negotiations are not dead yet, they have definitely hit a stalemate. Only discussions at the highest political level are now necessary to break the impasse, the source said.
However, if tensions escalate, it could also stall the ongoing trade deal negotiations between India and the US, experts said. A US trade team is set to visit India on August 25 for the sixth round of talks on the Bilateral Trade Agreement.
On Tuesday, Russia defended India's right to select trade partners. 'We believe that sovereign countries must have and do have the right to choose their trade partners, the partners in trade and economic cooperation, on their own and independently determine those modes of trade and economic cooperation that suit the interests of a country in question," Kremlin Spokesman Dmitry Peskov told journalists, commenting on the US' threats regarding India.
On Monday, Russian Foreign Ministry Spokesperson Maria Zakahrova accused the US administration of continuing a neocolonial policy against the nations of the Global South to maintain American hegemony.
After days of not reacting publicly to Trump's threats, India's Ministry of External Affairs (MEA) late Monday evening had issued a terse statement, where it termed the targeting by the US and the European Union for importing Russian crude as unjustified and unreasonable. 'Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,' it said.
In its statement on Monday evening, the MEA said India began importing from Russia because traditional supplies were diverted to Europe after the conflict began. The US at that time actively encouraged such imports by India for strengthening global energy markets stability, it said. Alluding to the US and EU's double standards on the issue, India pointed out that the EU in 2024 had a bilateral trade of €67.5 billion in goods with Russia. 'In addition, it had trade in services estimated at €7.2 billion in 2023. This is significantly more than India's total trade with Russia that year or subsequently. European imports of LNG in 2024, in fact, reached a record 16.5 million tonnes (mt), surpassing the last record of 15.21 mt in 2022,' the MEA said.
It added that Europe-Russia trade includes not just energy, but also fertilisers, mining products, chemicals, iron and steel and machinery and transport equipment. The US continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilisers as well as chemicals, the MEA said. It argued that India's imports are meant to ensure predictable and affordable energy costs to the Indian consumer, and a necessity compelled by global market situation. 'However, it is revealing that the very nations criticising India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion,' the MEA said.
Over the past one month, Trump repeatedly claimed that India and the US were close to finalising a mini trade deal, but the pact could not materialise before the August 1 deadline. 'The sticking point with India is that the tariffs are too high,' Trump said. Trump has time and again called India a 'tariff king' and flagged concerns over its high tariffs, especially in the case of items such as automobile, agricultural products. For instance, the US' average applied Most-Favoured Nation (MFN) tariff on agricultural goods is 5 per cent, whereas India's average applied MFN tariff or tariff for all nations is 39 per cent. 'They will give us zero tariff…but that's not good enough because what they're doing with oil is not good,' he said.