As India and the US continue discussions over a bilateral trade agreement, US President Donald Trump has announced a 25% tariff on Indian goods effective August 1, along with an unspecified penalty for India’s imports of defence and energy products from Russia.
Declared on July 31, 2025, Trump’s tariff enforcement targets Indian exports, citing high trade barriers and the trade imbalance between the 2 nations. The US aims to curb its trade deficit of $45.7 billion with India in 2024 by applying pressure amid stalled negotiations. Trump's remarks highlight India's non-monetary trade barriers, calling them “strenuous and obnoxious.”
The Indian government acknowledged the announcement and emphasised ongoing trade talks aimed at mutual benefit. India reaffirmed its commitment to protecting sectors including farming, MSMEs, and entrepreneurial interests. The next round of trade discussions is scheduled for August 25 in India, following the fifth round last week in Washington.
Trump added that India would incur an extra penalty due to its substantial purchases of Russian crude oil and military equipment. This penalty, unprecedented in scale, marks the first instance of the US executing secondary tariffs tied to Russian commercial ties. India’s dependency on Russian crude surged to 35–40% post-Ukraine invasion, positioning it as the second-largest buyer after China.
Read More: US-India Trade Deal: India May See 20–25% US Tariffs as Trade Discussions Continue!
The $129.2 billion goods trade between India and the US in 2024 had the US exporting $41.8 billion and importing $87.4 billion. India’s exports include pharmaceuticals, gems, petro-products, and automobiles, while its US imports mainly consist of oil, coal, aircraft, and electronics. Compared to other Asian nations like Vietnam (20%) and Indonesia (19%), India faces the highest tariff rate set by Trump at 25%.
President Trump’s imposition of a 25% tariff, coupled with a Russia-linked penalty, serves as a strategic push ahead of trade talks. While challenging for India’s export landscape, it could reshape ongoing negotiations crucial for future US–India economic relations.
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Published on: Jul 31, 2025, 11:21 AM IST
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