President Trump has announced the imposition of a 25% tariff on goods imported from India, along with an additional, unspecified "penalty" for India's continued trade with Russia, particularly its purchase of Russian oil and military equipment. This decision has cast a shadow over the relationship between the two countries, potentially complicating India's goal of doubling bilateral trade with the U.S. to $500 billion by 2030.

Trump justified the tariffs by stating that India's tariffs on U.S. products are "far too high". He claimed the U.S. has done "very little business with India" and that India's tariffs are "among the highest in the World". He also declared, "I don't care what India does with Russia. They can take their dead economies down together, for all I care".

The move comes as a surprise, given the perceived close relationship between Trump and Indian Prime Minister Narendra Modi. The two leaders have previously expressed mutual admiration and have sought to strengthen ties between their countries. However, this action suggests a potential shift in U.S. trade policy towards India, prioritizing a more assertive approach to address trade imbalances and geopolitical concerns.

The tariffs are expected to impact several key sectors in India, including textiles, pharmaceuticals, automobile components, steel and aluminum, solar equipment, and information technology services. Ajay Sahai, director general of the Federation of Indian Export Organisations, said that the demand for Indian goods is bound to be hit. He also expressed concern over the lack of clarity regarding the additional "penalty," stating, "We are back to square one as Trump hasn't spelled out what the penalties would be in addition to the tariff".

India's government has stated it is studying the implications of Trump's announcement. The move could put India at a disadvantage in the U.S. market compared to countries like Vietnam, Bangladesh, and possibly China. Experts suggest that India may need to cut prices to maintain its market share in the U.S.. Some also speculate that Indian firms might consider onshoring production to the U.S..

The decision to impose tariffs on India is also linked to the U.S. desire to penalize countries that continue to purchase Russian oil, which helps prop up Russia's wartime economy. Despite Western sanctions, India has significantly increased its imports of Russian oil since the start of the war in Ukraine. Trump has previously expressed a desire to be the U.S.'s "top oil salesman".

While announcing the tariffs, Trump stated that the two countries were still in the middle of negotiations on trade. "We're talking to India now," the president said. "We'll see what happens". He has also linked India's membership in the BRICS group of countries as another reason for the penalty.