US Trade Policy 2025: Trump’s 25% Tariff on India Signals Tough Stance on Russia Oil Imports
On July 30, 2025, US President Donald Trump proposed a substantial 25% tariff on all exports from India to the United States effective August 7, 2025, in addition to an unspecified “penalty” related to India’s energy and defense trade with Russia. Trump’s tariffs, announced on Truth Social, show his displeasure toward India for high tariffs, strenuous and obnoxious non-monetary trade barriers, and its continuing purchase of Russian oil and military equipment in the midst of the Ukraine conflict. While Trump expressed excitement at reports that India may stop importing Russian oil, his tariff made waves economically and geopolitically, risking US-India relations’ delicate balance.
The tariffs came after stalled discussions for a bilateral trade deal where India and the US hoped to increase trade from $131.8 billion to $500 billion by 2030.
India’s trade surplus with the US, totaling $45.8 billion in 2024, has been a contentious issue, with India facing significant cost increases on key exports, including pharmaceuticals ($8.1 billion), telecom instruments ($6.5 billion), and precious stones ($5.3 billion). Trump’s executive order focused on critical sectors such as petroleum products, pharmaceuticals, and electronics, easing some company burdens like the preemptive moment for Reliance Industries. However, other sectors impacted could feel the relief of textiles, automobiles, and MSME’s. Analysts have pointed out potential impacts on modelling. Tariffs could hurt GDP growth by -0.3% in 2024 if maintained. India’s reliance on Russian oil imports, which spiked from 0.2% to approximately 35-40% of oil imports since the Ukraine attacked Russia, was a factor for US geo-political and economic attention. Major Indian oil companies, including Indian Oil Corporation and Bharat Petroleum, have shifted some imports to Middle Eastern and West African suppliers as a response to US pressure. This aligns with Trump’s efforts for a ceasefire, but criticizes India and China for their roles in supporting Russia’s war economy, even shopping around for oil from sanctioned nations. Posts on X (formerly Twitter) are mixed, where some call the tariffs “geopolitical arson”, and others note India’s strategic pivot for avoiding secondary sanctions.
India’s Ministry of Commerce headed by Piyush Goyal remains cautiously optimistic, focusing on national interests and maintaining discussions with a US trade delegation during talks scheduled for August 25. Meanwhile, the government is studying the implications of the tariffs and emphasizing the farmers and small businesses. Here, Trump labeled India a “friend” in his taciturn rhetoric, but his actions (including a proposed 500% tariff bill sponsored by Senator Lindsey Graham) relates to a hardline approach to limit the oil trade with Russia. As India navigates and embraces strategic autonomy – maintaining relations with both Russia and the US for counter-balance against China – is becoming more critical.
As trade tensions continue to rise and escalate throughout the world, India finds itself in a precarious situation. If the tariffs are implemented, Indian firms will need to consider either moving their production onshore to the US or trying to negotiate access to the market, both of which incur risks of lost exports in the (very) short term – higher costs for consumers.
As always, I will keep you up to-date with the dynamics of US-India trade through reputable sources; The Hindu, Reuters, Bloomberg, etc.
