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Informist, Wednesday, Aug. 6, 2025

--White House: Extra 25% tariff on Indian goods to be effective Aug 27
--White House: US to impose additional 25% tariff on goods from India

--Trump: India currently directly or indirectly importing Russian oil
--CONTEXT: US had earlier announced 25% reciprocal duty on Indian goods

NEW DELHI – Following up on his threats, US President Donald Trump Wednesday imposed an additional 25% tariff on Indian goods being shipped to the US for maintaining a trade relationship with Russia, especially for procuring Russian crude oil. "I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil," Trump said a White House executive order.

On Jul. 30, Trump had announced a 25% tariff on Indian goods shipped to the US, along with an additional unspecified penalty for India's procurement of military equipment and energy from Russia. The 25% tariff is set to kick in Thursday and, according to the White House order, the additional 25% tariff will be collected from Aug. 27.

Trump's 25% duty announced last week in itself posed significant risk to India's exports as the US is India's top export destination with a share of nearly 20% in total outbound shipments in value terms. After the ad valorem duty announced Wednesday, it is fair to say the risks have doubled.

India exported goods worth $86.51 billion to the US in the financial year 2024-25 (Apr-Mar) and had a trade surplus of $40.82 billion, according to commerce ministry data. According to experts, the 25% tariff announced earlier could itself bring India's total exports below $400 billion in FY26, the first time in four years this would happen, and pose a downside risk of at least 20 basis points to economic growth.

India's problems are not just from the tariff but that New Delhi is being penalised for procuring oil from Russia, with whom the country has maintained close economic ties for several decades now. While India has traditionally relied on Moscow for military equipment, New Delhi has become one of the biggest buyers of the country's crude oil since Russia invaded Ukraine in February 2022.

India has been buying crude oil from Russia at discounted prices amid sanctions by Western countries on Russia. The Group of Seven developed nations had initially imposed a $60-a-barrel price cap on Russian crude. Later, it imposed more sanctions to try to curb Moscow's petroleum sales. India has bought Russian crude oil up to $30-a-barrel cheaper, though discounts have varied sharply over the past three years and have been around $4 a barrel in recent times. The International Monetary Fund in February said India saved around $7 billion per year by importing crude oil from Russia at discounted prices.

Over the last week, Trump has made many bitter remarks about India's trade relationship with Russia, including saying he does not care "what India does with Russia. They can take their dead economies down together, for all I care." After repeated unpleasant comments, in a sharp retort, India Monday said it has been targeted by the US and the European Union for importing oil from Russia after the Ukraine conflict began. "India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict," Randhir Jaiswal, official spokesperson of the Ministry of External Affairs, said in a statement. "The United States at that time actively encouraged such imports by India for strengthening global energy market stability."

To be able to escape Trump's tariff tirade, India may have to move away from Russian oil. To be fair, New Delhi has maintained that it is not fixated on Russian crude oil and will import from any country that suits its requirement. However, moving away from Russian oil may not be enough since Washington has been pushing countries to commit to buying energy from the US as part of the trade agreements, in addition to making investments there. The European Union committed to purchase $750 billion of US energy products over three years as part of its trade deal with Washington.

New Delhi and Washington have been negotiating a bilateral trade agreement for several months now, with the next round of negotiations scheduled to begin Aug. 25. At the last round in July, the two countries had extended talks but failed to sign a deal, mainly because of differences over market access for agricultural and dairy products. Exporters were hoping the bilateral trade agreement would shield Indian goods from adverse tariff impact, but that seems a distant dream now.

India will continue to procure Russian oil, given the price benefit, and protect its agriculture market by not offering free access to the US, even if that means New Delhi may not secure the first tranche of the bilateral trade agreement with Washington by October, a senior government official told Informist Tuesday. "Both these clauses are non-negotiable," the official said.  End

US$1 = INR 87.73

Reported by Priyasmita Dutta

Edited by Rajeev Pai

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