The United States has escalated trade tensions with India by doubling tariffs on many Indian goods to 50%, effective August 27, 2025, in response to New Delhi’s continued imports of discounted Russian oil.
This move, driven by President Donald Trump’s administration, aims to curb India’s energy trade with Russia, which Washington claims indirectly funds the ongoing war in Ukraine.
India, the world’s third-largest oil importer, has significantly increased its Russian oil purchases since 2022, with Russia now supplying over one-third of India’s crude oil needs, saving the country an estimated $17 billion.
The new tariffs pose a severe threat to India’s economy, particularly its $87 billion export market to the US, its largest trade partner in 2024.
The Indian government has condemned the tariffs as “unfair, unjustified and unreasonable,” warning that they could render exports like textiles, gems, jewelry, and footwear uncompetitive, risking significant job losses in labor-intensive sectors.
Garima Kapoor, Executive Vice President at Elara Securities, highlighted the potential for severe employment impacts in small and medium-scale enterprises, critical to India’s export-driven hubs.
India’s Commerce Ministry is exploring financial assistance for affected exporters and encouraging diversification to markets like China and Latin America.
However, analysts warn that the tariffs could disrupt India’s industrial value chain and weaken its global trade position.
Ajay Srivastava from the Global Trade Research Initiative described the tariffs as a “strategic shock” that could eliminate India’s presence in the US market.
Despite exemptions for sectors like pharmaceuticals and electronics, ongoing US investigations may lead to further duties, complicating India’s trade strategy.
The tariff hike follows failed US-India trade negotiations, with Washington pushing for greater access to India’s agriculture and dairy sectors, a demand Prime Minister Narendra Modi has resisted.
Modi emphasized protecting Indian farmers and small businesses, stating, “For me, the interests of farmers, small businesses and dairy are topmost. My government will ensure they aren’t impacted.”
India has also accused the US of double standards, noting its own trade with Russia in sectors like uranium and fertilizers.
As India balances its strategic partnerships with both the US and Russia, the tariffs could reshape bilateral ties and push New Delhi toward alternative markets.