Washington/New Delhi | US President Donald Trump on Wednesday slapped an additional 25 per cent tariff on goods coming from India as penalty for New Delhi's continued purchase of Russian oil, a move that is likely to hit sectors such as textiles, marine and leather exports hard.
Trump signed an executive order - Addressing Threats to the US by the Government of the Russian Federation - imposing the additional tariff over an above the 25 per cent levy which comes into effect from August 7.
After this order, the total tariff on Indian goods, barring a small exemption list, will be 50 per cent.
"The ad valorem duty imposed...shall be in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports...," the order said.
While the initial duty becomes effective on August 7, the additional levy will come into effect after 21 days or August 27.
"I find that the Government of India is currently directly or indirectly importing Russian Federation oil. Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent," it said.
India buys about 88 per cent of its crude oil, which is converted into fuels like petrol and diesel, from overseas. Russian oil made up for hardly 0.2 per cent of all crude oil that India imported till 2021. After Moscow invaded Ukraine, Russian oil was available at a discount to international benchmarks due to western sanctions, and was quickly lapped up by Indian refiners. Russia is now India's largest oil supplier.
In July, India imported about 5 million barrels of oil a day, of which 1.6 million came from Russia.
After the new levy, India will attract the highest tariff of 50 per cent along with Brazil. After this, India's competitors will be much better placed in the US market as their duty is lower - Myanmar (40 per cent), Thailand and Cambodia (both 36 per cent), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (both 30 per cent), Malaysia (25 per cent), Philippines and Vietnam (both 20 per cent).
There was no immediate response from the Indian government on the fresh levy.
The announcement comes at a time when a US team is scheduled to visit India from August 25 for the sixth round of negotiations for the proposed bilateral trade agreement (BTA).
The sectors, which will have to bear the brunt of these tariffs include textiles/ clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.
The exempted goods, which will not be subject to the high tariffs, include pharmaceutical; energy products such as crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; and a wide range of electronics and semiconductors, like computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
According to exporters, the move would affect India's USD 86 billion worth of exports to the US severely.
"It is extremely shocking. It will impact India's 55 per cent of exports to US," Federation of Indian Export Organisations (FIEO) DG Ajay Sahai said.
In 2024-25, the bilateral trade between India and the US stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports).
The announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed BTA.
The US is seeking duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, agri goods, dairy items, apples, tree nuts, and genetically-modified crops.
The two countries are aiming to conclude the first phase of the pact by fall (October-November) this year.
New Delhi | India on Wednesday described the US action of levying 25 per cent additional tariff on Indian goods as "unfair, unjustified and unreasonable".
New Delhi's sharp reaction came shortly after US President Donald Trump signed an executive order imposing the fresh tariff citing India's continuing purchase of Russian crude oil notwithstanding the Western sanctions.
The new tariff is in addition to 25 per cent levies he has already announced.
In a statement, the Ministry of External Affairs (MEA) said India will take all actions necessary to protect its national interests.
"We reiterate that these actions are unfair, unjustified and unreasonable," it said.
The MEA said the US has in recent days "targeted" India's oil imports from Russia.
"We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India," it said.
"It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," it added.
New Delhi | Indian refiners are likely to go slow on import of oil from Russia and may double down on efforts to diversify their import basket further as New Delhi assesses the impact of US President Donald Trump’s announcement of additional tariffs
Trump issued an executive order on Wednesday doubling tariffs on goods from India to 50 per cent for continuing to import oil from Russia, which purportedly uses that revenue to fund its war with Ukraine.
While the government has given oil companies a free hand to plan crude purchases keeping commercial viability in mind, refiners may look to boost imports from the US and other non-OPEC suppliers as a balancing act, three sources with knowledge of the matter said.
After the latest tariff order, refiners would be adopting a cautious approach to Russian imports, they said, adding the government has so far not told them to stop or go slow on purchases from Moscow.
Soon after Trump's executive order, officials went into a huddle, discussing possible fallout and alternatives.
No official comment was immediately available on the latest US tariffs.
India buys about 88 per cent of its crude oil, which is converted into fuels like petrol and diesel, from overseas. Russian oil made up for hardly 0.2 per cent of all crude oil that India imported till 2021. After Moscow invaded Ukraine, Russian oil was available at a discount to international benchmarks due to Western sanctions, and was quickly lapped up by Indian refiners. Russia is now India's largest oil supplier.
India imports about 5 million barrels of oil a day, of which 1.6 million came from Russia in July.
Sources said discounts on Russian oil have shrunk to less than USD 2 per barrel, not offering much economic benefit for buying from Moscow.
But it will be near impossible to swiftly unwind the Russian imports given the volumes India now buys, they said, adding Middle East suppliers, which were the main source in the pre-Ukraine war era, may see a resurgence with the largest volumes.
India is the largest importer of Russian crude ahead of China and Turkey.
The US tariffs follow the European Union ban on the import of petroleum products (fuel) made from Russian crude starting in January 2026.
India's Reliance Industries Ltd and Russian oil giant Rosneft-backed Nayara Energy Ltd will be those hit hard by the sanctions. The two, particularly Reliance, were the biggest exporters of fuel from India to Europe.
India historically bought most of its oil from the Middle East, including Iraq and Saudi Arabia. However, things changed when Russia invaded Ukraine in February 2022.
India, the world's third-largest crude importer after China and the US, began snapping up Russian oil that was available at a discount after some in the West shunned it as a means to punish Moscow for its invasion of Ukraine.
From a market share of just 0.2 per cent in India's import basket before the start of the Russia-Ukraine conflict, Russia overtook Iraq and Saudi Arabia to become India's No.1 supplier, with a share as high as 40 per cent at one point of time.
Last month, Russia supplied more than a third of all crude oil imported by India.
India bought 68,000 barrels per day of crude oil from Russia in January 2022, according to global real-time data and analytics provider Kpler. That month, Indian imports from Iraq were 1.23 million bpd and 883,000 bpd from Saudi Arabia.
In June 2022, Russia overtook Iraq to become India's largest oil supplier. Russian imports peaked at 2.15 million bpd in May 2023 and have varied – depending upon the discount at which the oil was available. But the volumes never slipped below 1.4 million bpd since then, which is more than what India was buying from its top supplier Iraq before the Russia-Ukraine conflict.
G7 countries in December 2022 imposed a USD 60 per barrel price cap on Russian crude. Under the mechanism, European companies were permitted to transport and insure shipments of Russian oil to third countries as long as it is sold below the capped price -- an effort to limit the impact of the sanctions on global oil flows but ensure Russia earns less from the trade.
Last month, the European Union decided to lower the price cap to USD 47.6 and introduced an automatic and dynamic mechanism for its review in the future. The idea is to keep the cap at 15 per cent lower than the average market price.
In addition to stoking India's economy, cheap Russian oil gave refiners lucrative business -- refining that crude and exporting the products to deficit countries.
These included the European Union, which had banned direct crude oil purchases from Russia.
The bulk of the crude that goes to India from Russia arrives at ports in Gujarat, where Reliance Industries Ltd's Jamnagar refinery, the largest in the world, and Nayara Energy-owned India's second-largest refinery, less than 10 miles away at Vadinar, turned them into fuel.
New Delhi | The US decision to impose an additional 25 per cent tariff on Indian goods is "extremely shocking" and will impact 55 per cent of India's exports to America, FIEO said on Wednesday.
US President Donald Trump on Wednesday slapped an additional 25 per cent tariff on goods coming from India as a penalty for New Delhi's continued purchase of Russian oil, a move that is likely to hit sectors such as textiles, marine and leather exports hard.
After this order, the total tariff on Indian goods, barring a small exemption list, will be 50 per cent.
"This move is a severe setback for Indian exports, with nearly 55 per cent of our shipments to the US market directly affected. The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35 per cent competitive disadvantage compared to peers from countries with lesser reciprocal tariff," Federation of Indian Export Organisations (FIEO) DG Ajay Sahai said.
He added that many export orders have already been put on hold as buyers reassess sourcing decisions in light of higher landed costs.
"For a large number of MSME-led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long-standing clients," Sahai said.
With this high tariff, the domestic exporters will have to look for alternative markets, he said.
After the new levy, India will attract the highest tariff of 50 per cent along with Brazil. After this, India's competitors will be much better placed in the US market as their duty is lower - Myanmar (40 per cent), Thailand and Cambodia (both 36 per cent), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (both 30 per cent), Malaysia (25 per cent), Philippines and Vietnam (both 20 per cent).
In 2024-25, the bilateral trade between India and the US stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports).
