Washington/New Delhi | US President Donald Trump on Wednesday announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment.
The surprise announcement came a day after Indian officials said that a US trade team would visit from August 25 to negotiate a trade deal.
The announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the US, which has, in recent days, got favourable trade deals with major partners like Japan, the UK and the European Union.
In a social media post, Trump termed India's trade policies as "most strenuous and obnoxious".
"All things not good! India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August first," Trump said.
The penalty was announced as India has made large purchases of oil and military equipment from Russia. India is the first country to face a penalty for Russian imports. Previously, Trump slapped high tariffs on China but refrained from levying any penalty despite Beijing being Russia's largest oil importer.
India's import of crude oil from Russia has risen from 0.2 per cent of total purchases before the Russia-Ukraine war to 35-40 per cent. New Delhi is the largest buyer of Russian oil after China.
Trump said though India is America's friend, "we have, over the years, done relatively little business with them because their (India) tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country".
He said India has always purchased a significant amount of military equipment and energy products from Russia at a time when everyone wants Russia to stop the "killing" in Ukraine.
Commenting on the development, New Delhi said it is studying the implications of these tariffs and is still hopeful of concluding a fair, balanced and mutually beneficial trade agreement.
"India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," it said.
Meanwhile, the Indian rupee on Wednesday logged its steepest single-day fall in over three years, dropping by 89 paise to close at an all-time low of 87.80 against the US dollar.
Indian industry expressed disappointment over the announcement and said that it may impact the country's exports and add to the worsening global trade situation.
From just 0.2 per cent before the Russia-Ukraine war to now accounting for 35-40 per cent of total crude imports, India's reliance on Russian oil has surged -- drawing fresh scrutiny with Trump announcing a penalty along with tariff.
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.
It was not clear if the 25 per cent duty will be imposed in addition to the existing 10 per cent baseline tariff. The 10 per cent tariff, which currently applies to most Indian goods barring a few, was announced by Trump on all countries on April 2.
Also, the exact quantum of the penalty is unclear.
Among India's major trade competitors, the US has imposed lower tariffs on Vietnam (20 per cent) and Malaysia (25 per cent), but higher on Bangladesh (35 per cent) and Thailand (36 per cent).
On April 2 this year, Trump announced high reciprocal tariffs on various countries, including India (26 per cent). The implementation of high tariffs was immediately suspended for 90 days till July 9 and later until August 1, as America is negotiating trade deals with various countries. However, the baseline tariff of 10 per cent remains.
In addition to this, the US has imposed a 50 per cent duty on steel and aluminium and a 25 per cent tariff on the auto sector.
Meanwhile, negotiations for the proposed bilateral trade agreement are on as a US team is visiting New Delhi on August 25 for the sixth round of talks.
The top officials of the countries concluded the fifth round recently in Washington.
India's chief negotiator and special secretary in the Department of Commerce Rajesh Agrawal and Assistant US Trade Representative for South and Central Asia Brendan Lynch held the deliberations.
During 2021-25, the US was India's largest trading partner. The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
With America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25 and USD 27.7 billion in 2022-23.
In 2024-25, bilateral trade between India and the US reached USD 186 billion. India exported USD 86.5 billion in goods while importing USD 45.3 billion.
In services, India exported an estimated USD 28.7 billion and imported USD 25.5 billion, adding a USD 3.2 billion surplus. Altogether, India ran a total trade surplus of about USD 44.4 billion with the US.
In 2024, India's main exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), vehicle and auto components (USD 2.8 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton, including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion).
New Delhi | Indian industry on Wednesday expressed disappointment over US President Donald Trump's announcement to impose 25 per cent tariff along with penalty on Indian goods.
Industry body Ficci hoped it is a "temporary phenomenon" and the two nations will secure a permanent trade deal soon.
Trump has announced a 25 per cent tariff on India plus a "penalty" amount which has not been specified, effective August 1.
"While this move is unfortunate and will have a clear bearing on our exports, we hope that this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon," FICCI President Harsha Vardhan Agarwal said.
"There is a lot our two countries can achieve together, and FICCI is confident that following the detailed deliberations that are currently underway, we will see beneficial outcomes for both countries when the contours of the final trade agreement will emerge," he added.
"India has been actively negotiating a BTA with the US since the start of the year, and we understand that there had been some specific demands from the US side which are not in our national interest and therefore Indian government has not given in to those demands from the US," the FICCI President said.
The Confederation of Indian Textile Industry (CITI) said that the new US tariff rate for India presents a stiff challenge for the textile sector.
"However, CITI remains hopeful that the tariff issue will get resolved once the proposed bilateral trade agreement (BTA) between India and the United States is in place," it added.
Notably, the US is India's largest market for textile and apparel exports.
During January-May 2025, US imports of textiles and apparel from India were valued at USD 4.59 billion, a rise of more than 13% compared to the same period last year when the figure stood at USD 4.05 billion.
Hemant Jain, President, PHDCCI, however, said while Indian MSMEs are momentarily impacted, this is also an opportunity.
"With global buyers looking to de-risk from overdependence on select geographies, India is emerging as the most credible, democratic, and scalable alternative," he said, adding that now is the time for Indian industry to step up with quality, compliance, and competitiveness.
Rahul Mehta - Chief Mentor of Clothing Manufacturers Association of India, said if the proposed terms do come into effect, "it will make our products 7 per cent to 10 per cent more expensive than some of our competitors, and it will certainly hurt our Apparel exports to the US”. “Fortunately, this setback has come at the time when we have just signed an FTA with the UK, and are proceeding rapidly with an FTA with the EU. So yes, it is tough times, but not beyond our ability to face."
New Delhi | US President Donald Trump's announcement to impose a 25 per cent tariff and penalty on Indian goods may seem severe but the country is not in a worse position than nations that signed trade deals with Washington, think tank GTRI said on Wednesday.
The Global Trade Research Initiative (GTRI) said the UK, the EU, Japan, Indonesia, and Vietnam now face elevated tariffs, and in return, have given sweeping concessions --zero tariffs on US farm goods, massive investment pledges, and purchases of American oil, gas, and arms.
India has made no such concessions, it added.
"While Trump's announcement of a 25 per cent tariff plus penalty on Indian goods appears harsh, a closer look shows that India is not significantly worse off than countries that did sign deals with the US," GTRI Founder Ajay Srivastava said.
He added that India did not walk away from the deal and it negotiated in good faith but refused to cross its red lines particularly on agriculture, where over 700 million livelihoods are at stake.
Trump's justification for India's tariffs, trade barriers, and ties with Russia does not stand up to scrutiny, he said, adding that India's tariffs are WTO-compliant, non-tariff barriers are common globally, and discounted Russian oil has helped India manage inflation during global volatility.
"India is not alone; over 90 countries face similar US pressure. A deal may still emerge, but only on fair terms. For now, India's principled stand has avoided the trap of a one-sided deal -- and that's a success," he added.
New York/Washington | US President Donald Trump's move to levy a sweeping 25 per cent tariff on Indian imports is a "major setback" in bilateral relations at a time when New Delhi is striving to become an alternative destination to China for American investors and traders, a former US Trade Representative official said.
"While there were early indications that a trade deal with India was imminent, it turned out that this was not possible," Senior Vice President of Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler said in a statement.
Trump on Wednesday announced imposing a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying Russian crude oil and military equipment.
The surprise announcement came a day after Indian officials said that a US trade team would visit from August 25 to negotiate a trade deal.
Cutler said the 25 per cent tariff assigned to India is a "major setback" in US-India relations at a time when Delhi is striving to become an alternative destination to China for US investors and traders.
"Hopefully, the high tariff will spur India to reconsider its current positions and take bold steps to address US concerns, including lowering its tariffs and eliminating the litany of non-tariff measures it imposes," she said.
Pointing to India's "domestic protectionist forces" that have obstructed trade deals earlier, Cutler said there were hopes that things were different this time around but "they never materialized".
ASPI's Director of South Asia Intitiatives Farwa Aamer said there was strong optimism around the robust five rounds of trade talks, but clearly there was not enough to satisfy Washington's expectations.
"These negotiations were always going to be complex, and even with an early start to the talks, the timeline was too tight given India's sectoral concerns and strong reservations on opening access to its dairy and agriculture markets," Aamer said.
The 25 per cent rate is much higher than that of Japan, Vietnam, and Indonesia, which means India loses some of its competitive advantage. "This will certainly impact the export sector, making the case for fast-tracking negotiations on the BTA as they go into the next round of talks in August," she said.
Aamer added that the measure may also "dim" the confidence in the US-India bilateral relationship.
"There is the India-Pakistan ceasefire mediation narrative that the president has championed and India has repeatedly dismissed. The Russia and BRICS angle is another factor. All eyes are on how India will deal with this 'temporary measure'," Aamer said.
Former advisor to President Joe Biden and a Democrat Ajay Bhutoria voiced "serious alarm" over the 25 per cent tariff and penalty announced by Trump on India, characterizing this action as "signalling the deepest decline" in India-US relations under the current administration.
In a post on social media, Trump said that the US has a massive trade deficit with India and also criticised India for buying a "vast majority" of its military equipment and energy from Russia.
Bhutoria said that as a committed Democrat, he is "profoundly" concerned by this development.
"I had earlier cautioned the Indian-American community about the potential for this outcome" and to vote for Democratic leader and former Vice President Kamala Harris in the 2024 elections.
"Now we are experiencing its effects. The tariff puts the livelihoods of numerous South Asians at risk and jeopardizes years of advancement done in US-India relationship under President (Barack) Obama and President Biden," he said.
Bhutoria added that the India-USA relationship has fallen to its most challenging phase due to flawed policies, with this 25 per cent tariff plus penalty set to start on August 1st, adding that this "stringent measure" endangers "our economic stability and cultural connections".
Trump also said that the August 1 deadline for tariffs stands strong and will not be extended. "A Big Day for America," he said.
"Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine — All things not Good!
"India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August 1st," Trump said.
Meanwhile, the Indian government said in a statement that it has taken note of Trump's statement on tariffs and is studying its implications.
"India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," the statement said.
"The government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs and MSMEs. The government will take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest comprehensive economic and trade agreement with the UK," it sad.
