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Informist, Thursday, Jul. 31, 2025

NEW DELHI – Hours after announcing India would have to pay 25% tariffs and an unspecified penalty from Friday, US President Donald Trump Wednesday said New Delhi and Washington were negotiating a trade deal. As part of the trade deal, India was willing to cut tariffs "very substantially", he said.

"They have one of the highest tariffs in the world. They are willing to cut it very substantially, but we'll see what happens. We are talking to India." Trump said it doesn't matter "too much whether we have a deal or whether we charge them a certain tariff" and that "you'll know at the end of this week".

Earlier on Wednesday, Trump said exports from India to the US would face 25% tariffs and a penalty for India's procurement of military equipment and energy from Russia. While announcing the tariff and the penalty on the Truth Social platform, Trump said India had the most "strenuous and obnoxious non-monetary" trade barriers of any country. 

"Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST," Trump said on the Truth Social post. 

At a press conference later on Wednesday, Trump cited India being part of the BRICS as the reason for the additional penalty. "It's also BRICS, which is basically a group of countries that anti US and India is a member of that. It is partially BRICS and it is partially the trade situation." Trump has earlier threatened to impose an additional 10% tariff on BRICS countries, including India.

Responding to Trump's tariff announcement, the Indian government Wednesday said it was studying the implications of the 25% tariff and the additional penalty. It said India was committed to concluding a fair, balanced, and mutually beneficial bilateral trade agreement with the US, which the two sides had been negotiating over the past few months. The Indian government said it attached the utmost importance to protecting and promoting the welfare of farmers, entrepreneurs, and micro, small, and medium enterprises. 

India and the US have held five rounds of talks for the trade deal. A delegation of officials from the US is likely to arrive in New Delhi on Aug. 25 for the next round of negotiations for the proposed trade deal. The government "will take all steps necessary to secure our national interest, as has been the case with other trade agreements", the Indian government said Wednesday.

The 25% duty along with penalty could significantly hurt India's exports, as the US is India's top export destination with a share of nearly 20% in total outbound shipments. India exported goods worth $86.51 billion to the US in 2024-25 (Apr-Mar) and had a trade surplus of $40.82 billion, according to commerce ministry data.  End

US$1 = INR 87.42

Reported by Shubham Rana

Edited by Avishek Dutta

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