Explained: Impact of Trump imposing 25% tariffs on India for buying Russian crude

New Delhi: US President Donald Trump on Wednesday announced that a penalty and a 25% tariff will be imposed on Indian goods starting August 1.

In a post on Truth Social, Trump criticised India’s tariffs on US products as “obnoxious” and “strenuous” and accused India of continuing trade ties with Russia despite ongoing Western sanctions. Trump further declared an unspecified “penalty” on India for purchasing Russian military equipment and energy, including crude oil.

Trump wrote, "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."

He further added, "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 1st. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!"

India’s import of Russian crude oil

India has significantly increased its energy procurement from Russia in the last few years, notwithstanding increasing Western sanctions against Moscow over its invasion of Ukraine and continues to import both Russian energy and military hardware.

Trump’s announcement is presumably linked to his broader frustration with Russian President Vladimir Putin for not agreeing to a ceasefire with Ukraine. Trump has expressed disappointment over the stalled peace efforts and emphasised his impatience with both Putin and Ukrainian President Zelenskyy.

His administration is now signalling increased pressure on nations indirectly funding Russia through trade.

Although Trump has mentioned penalties, no detailed mechanism or list of impacted goods has been published. The move appears more political than practical at this stage.

Impact on India-US trade and dialogue

Despite these developments, the tariff threats from Trump do not currently translate into tangible consequences for Indian exporters or industries.

India’s trade negotiations with the US, including talks on agriculture and labour-intensive sectors, may continue in parallel without disruption.

India and the US teams concluded the fifth round of talks for the agreement last week in Washington. Trump's announcement may further delay the finalisation of long-pending agreements and complicate efforts to establish a more stable trade framework.

On April 2 this year, Trump announced high reciprocal tariffs. 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.

India's merchandise exports to the US rose 22.8 per cent to USD 25.51 billion in the April-June quarter this financial year, while imports rose 11.68 per cent to USD 12.86 billion.