US President Donald Trump announced on August 6, 2025, an executive order imposing an additional 25% tariff on Indian imports, raising the total US tariff burden on India to 50%. This action, justified by Trump as a “punishment” for India’s continued and increased purchase of Russian oil despite ongoing US and Western sanctions against Moscow, marks a significant escalation in the recent US-India trade dispute.

Trump, in interviews and official statements, accused India of undermining US-led efforts to pressure Russia over its invasion of Ukraine by buying heavily discounted Russian oil and then, in some instances, allegedly reselling it for profit.

He described India as “not a good trading partner,” criticising not only its energy dealings but also longstanding trade barriers against American products. Trump brushed aside recent Indian offers of eliminating tariffs on certain US goods, stating “that’s not good enough because of what they’re doing with oil,” and emphasised that the tariffs would go up “very substantially over the next 24 hours” in response to New Delhi’s stance.

This 25% increase doubles the pre-existing tariff rate, amounting to a 50% tariff on a broad array of Indian exports to the US. The move is expected to affect almost $64 billion worth of Indian exports, including key sectors such as pharmaceuticals, garments, gems, jewelry, and petrochemicals.

Analysts note this could significantly erode India’s price competitiveness in the American market, challenging its major export-dependent industries and potentially leading to notable export losses. However, since goods exports to the US constitute approximately 2% of India’s GDP, the broader economic fallout may be contained to growth losses in the range of 40 basis points, according to estimates cited by the Reserve Bank of India.

The Indian government responded strongly, rejecting what it called “unjustified and unreasonable” targeting of India for its energy strategy, and pointing out that the US and European Union themselves continue to maintain various forms of trade with Russia. Indian ministries emphasised the country’s right to pursue its own economic and energy interests—particularly after the US and its allies had earlier encouraged India to purchase Russian oil to help stabilise global energy prices following the Ukraine invasion. India maintains that its actions have been critical for global market stability.

International analysts warn that Trump’s tariff move, if sustained, could have broader negative consequences—including a possible increase in consumer prices and input costs in the US, as American companies who rely on Indian imports may see their profit margins squeezed. There is also the risk of further escalation: Trump has hinted at possible 100% tariffs or additional sectoral measures targeting not only India but also other buyers of Russian energy, including China.

Despite US pressure, India remains determined to protect its national interests and strategic autonomy. As diplomatic friction continues to grow, the prospects for a swift trade resolution between the two countries look distant. The current punitive trade measures mark a sharp downturn in US-India relations, with both governments preparing for potentially protracted economic and strategic contestation.

Agencies