Key Takeaways:
✔ US imposes 25% tariff on India, citing trade barriers and India’s Russian oil purchases.
✔ India pledges strong response, emphasizing protection for farmers, MSMEs, and exporters.
✔ Trade talks to continue despite tensions, with a US delegation visiting Delhi in August.
US Hits India with 25% Tariff – Delhi Vows Firm Action
The Indian government has strongly reacted after former US President Donald Trump announced a 25% tariff on Indian imports, effective August 1, along with an unspecified “penalty” for India’s continued purchases of Russian oil and military equipment.
In an official statement, India’s trade ministry said it was “studying the implications” of Trump’s decision but assured that “all necessary steps will be taken to safeguard national interests.” The statement emphasized India’s commitment to a “fair and balanced” trade deal with the US, while protecting its farmers, small businesses, and exporters.
Why Did Trump Impose the Tariff?
Trump, in a post on Truth Social, accused India of maintaining “the most strenuous and obnoxious non-monetary trade barriers” and claimed US-India trade has been limited due to high tariffs. He also criticized India’s rising Russian oil imports, which have surged from 0.2% to nearly 40% of India’s energy needs since the Ukraine war began.
“All things not good! India will therefore be paying a tariff of 25%, plus a penalty,” Trump declared, framing the move as a response to India’s trade policies and its ties with Russia.
Trade Talks Continue Amid Tensions
Despite the tariff announcement, a US trade delegation is still scheduled to visit New Delhi on August 25 for the next round of negotiations. The two nations have been working toward a bilateral trade deal, with previous discussions held in Washington earlier this year.
India remains one of the US’s top trading partners, with bilateral trade reaching $186 billion in FY 2024-25. India enjoys a $44.4 billion trade surplus, exporting pharmaceuticals, gems, telecom equipment, and petroleum products, while importing US crude oil, coal, and aerospace technology.
What’s at Stake for India?
Key Indian exports that could be affected include:
- Pharmaceuticals ($8.1 billion)
- Jewellery & gems ($8.5 billion)
- Telecom equipment ($6.5 billion)
- Petroleum products ($4.1 billion)
Experts warn that escalating tariffs could disrupt supply chains, but India has previously navigated trade disputes with the UK and EU, signaling it may adopt a tough stance in negotiations.
What Happens Next?
With the August 1 deadline looming, India is expected to explore countermeasures, potentially targeting US imports. Meanwhile, businesses on both sides await clarity on the “penalty” Trump mentioned, adding another layer of uncertainty to already strained trade relations.
As tensions rise, the world watches to see if diplomacy can prevail or if this marks the start of a broader US-India trade conflict.
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