Washington: US President Donald Trump has announced a 25 percent tariff on India from August 1, amid signs of some stalemate in the ongoing negotiations between the two countries on a bilateral trade deal.
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.
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).
All things not good with India, says Trump
Trump, announcing the tariff, listed India’s high tariffs, its procurement of “vast majority” of military equipment and energy from Russia as well as “obnoxious non-monetary trade barriers”.
“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 in a social media post.
The penalty is because India has made large purchases of oil and military equipment from Russia. India’s import of crude oil from Russia has risen from 0.2 percent of total purchases before the Russia-Ukraine war to 35-40 percent. New Delhi is the largest buyer of Russian oil after China.
The US president, however, described India as a “friend”. 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, he said.
“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%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!” the US President added.
There is no immediate reaction from India on Trump’s announcement.
It was, however, 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.
Tariff negotiations to continue next month
A team from the US is scheduled to visit India next month for the next round of negotiations for the proposed bilateral trade agreement.
India and the US teams concluded the fifth round of talks for the agreement last week 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.
All ‘taarif’ between him and ‘Howdy Modi’: Congress
Soon after Trump’s announcement, the Indian National Congress took a swipe at Prime Minister Narendra Modi saying the latter should take inspiration from former prime minister Indira Gandhi and stand up to the president of the United States.
“President Trump has slapped a tariff of 25 per cent plus penalty on imports from India. All that ‘taarif’ between him and ‘Howdy Modi’ has meant little,” Congress general secretary Jairam Ramesh said in a post on X.
“Mr Modi thought that if he kept quiet on the insults that the US President has hurled on India — the 30 claims of stopping Op Sindoor, the special lunch for the Pakistan Army Chief whose inflammatory remarks provided the immediate backdrop to the brutal Pahalgam terror attacks, and US support for financial packages to Pakistan from the IMF and the World Bank — India would get special treatment at the hands of President Trump. Clearly that has NOT happened,” he said.
“He should take inspiration from Indira Gandhi and stand up to the US President,” the Congress leader added.
On April 2 this year, Trump announced high reciprocal tariffs on a number of countries, including India (26 percent). 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 percent remains.
In addition to this, the US has imposed 50 percent duty on steel and aluminium and 25 percent duty on auto sector.
US-India trade
During 2021-25, the US was India’s largest trading partner. The US accounts for about 18 percent 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).
