Donald Trump has escalated trade tensions with India by imposing an additional 25% tariff on Indian goods, effectively doubling the existing tariff to 50%. This move is largely attributed to India's continued purchase of Russian oil despite Western pressure to cut ties with Moscow following the invasion of Ukraine.
Trump's decision has sent shockwaves through New Delhi, leaving officials "shocked, jilted, and unsure of how to respond". According to an official in New Delhi, Trump's harsh rhetoric, which included calling India's economy "dead" and its tariff barriers "obnoxious," has strained the relationship between the two countries.
The increased tariffs, which took effect on August 7, 2025, impact a significant portion of India's exports, particularly in sectors like pharmaceuticals and textiles. An internal assessment by the Ministry of Commerce and Industry indicates that a 25% tariff would affect approximately 10% of India's exports between July and September.
India has firmly rejected the criticism and accused the U.S. and EU of double standards, as they continue their own trade with Russia. The Indian government has defended its imports as vital to national interest and has signaled that it will not instruct refiners to halt Russian crude purchases. External Affairs Minister S. Jaishankar emphasized India's commitment to its strategic autonomy and its right to make decisions based on its own needs.
The tariff hike is viewed by many as a pressure tactic ahead of the next round of bilateral trade talks, scheduled for August 25–29 in India. However, the move has complicated the already strained relationship between the two countries and has raised concerns about the future of U.S.-India trade relations.
Prior to this escalation, Indian officials had been in negotiations with the Trump administration, with some expecting a deal that would cap tariffs at 15%. India had reportedly offered concessions, including zero tariffs on industrial goods that constitute 40% of U.S. exports to India, and gradual reduction of tariffs on U.S. cars and alcohol. However, negotiations faltered, and Trump's tone shifted, particularly after he threatened higher duties for countries in the BRICS bloc, citing their anti-U.S. stance.
The current situation has led the Indian government to explore measures to support exporters and mitigate potential economic damage. Prime Minister Narendra Modi has urged citizens to buy more local goods to offset any slump in global demand. The Ministry of Commerce and Industry is also discussing ways to assist the hardest-hit export sectors, such as gems and jewelry and textiles.
Despite the tensions, some analysts believe that India will not seek confrontation and that the long-term strategic objectives of maintaining strong ties with the U.S. will prevail. However, others caution that the U.S. is using tariffs as a weapon, which could have lasting consequences for the bilateral relationship.
Adding to the complexity, Trump has also linked the tariff increase to India's trade practices, accusing the country of having high barriers to trade. He has set an ultimatum for Russia to reach a truce with Ukraine by August 8, threatening secondary sanctions on countries like India and China that continue to purchase Russian oil.
Amidst these challenges, India finds itself navigating a complex geopolitical landscape, balancing its strategic partnership with the U.S. with its economic interests and its relationship with Russia.
