US President Donald Trump’s 25% additional tariffs on India for its crude oil trade with Russia are set to impact Indian exports and Indian economy negatively, if they are implemented and the rate persists, feel experts, while adding that the move is a pressure tactic. Trump on Wednesday signed an executive order imposing an additional 25% tariff on Indian exports to the US, citing India’s ongoing Russian oil purchases. Notably, Trump has not imposed any additional tariff on China, which is the highest purchaser of Russia’s crude oil. This additional duty is expected to severely impact India’s textile, marine and leather export sectors.Also Check | Donald Trump imposes 25% extra tariff on India – track live updatesThe executive order, titled “Addressing Threats to the US by the Government of the Russian Federation”, establishes this additional tariff alongside the existing 25% levy. Following this directive, Indian goods will face a combined tariff of 50%t, with limited exceptions.The order specifies that “The ad valorem duty imposed…shall be in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports…”The implementation timeline shows the base duty taking effect from August 7, whilst the additional charge begins from August 27, following a 21-day period.The order states: “I find that the Government of India is currently directly or indirectly importing Russian Federation oil. Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent.”
Where does India stand on the Trump tariff table?
The revised tariff structure places India and Brazil at a significant disadvantage, both facing the highest duty rate of 50% in the US market. Other Asian nations benefit from lower tariffs: Myanmar at 40%, Thailand and Cambodia at 36% each, Bangladesh at 35%, Indonesia at 32%, whilst China and Sri Lanka share a 30% rate. Malaysia faces a 25% duty, whilst the Philippines and Vietnam enjoy the lowest rates at 20% each.
How will Trump’s 50% tariffs impact India?
Industries that will face the impact of these tariffs include textiles/clothing, gems and jewellery, shrimp, leather and footwear, animal products, chemicals, and electrical and mechanical machinery.Products exempt from these elevated tariffs are pharmaceutical items, energy resources such as crude oil, refined fuels, natural gas, coal, and electricity, critical minerals, and various electronic components including computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.The move would significantly impact India’s exports to the US, according to export industry representatives.“It is extremely shocking. It will impact India’s 55% of exports to the US,” Federation of Indian Export Organisations (FIEO) DG Ajay Sahai said.The trade statistics for 2024-25 indicate that India-US bilateral trade reached $131.8 billion, of which $86.5 billion are in exports and $5.3 billion are in imports.Also Read | ‘Extremely unfortunate’: India reacts strongly to Donald Trump’s 25% additional tariff for buying Russian oil; ‘will take all actions necessary…’According to A Prasanna, Chief economist, ICICI Securities Primary Dealership, the additional tariffs will come into effect after 21 days but it will be on top of earlier 25% so the total 50% rate will be a big negative for Indian exports. “However some key segments like electronics and pharma continue to be exempt from this additional rate. At 50% rate, many Indian exports will face a handicap versus countries that are in the 15-30% bucket,” he told Reuters.Teresa John, Lead Economist, Nirmal Bank Institutional Equities is of the view that with today’s additional tariff, the pressure is building on India to finalise a trade deal. “India may agree to significantly reduce Russian purchases over a phased manner and diversify to other sources,” Teresa John said.Agneshwar Sen, Trade Policy Leader at EY India sees these developments as disappointing. “It is disappointing to see additional tariffs being announced at a time when we are actively working towards resolving the earlier differences and to strengthen our trade relationship through a trade agreement,” he said.“Announcing another 25% tariff places unnecessary strain on the trade environment. While nations have the right to address trade concerns through tariff measures, political differences are best resolved through mutual dialogue and established forums, not through such measures. I remain hopeful that the Government of India will continue to engage and seek a balanced resolution with the US,” he added.Economists also warn that doubling the tariff rate to 50% will hit India’s GDP growth. Sakshi Gupta, Principal Economist at Hdfc Bank said, “While Trump’s order gives another 21 days for a deal to breakthrough, in case it does not we will have to significantly lower FY26 GDP growth forecast to below 6%, baking in a 40-50 bps hit. This would be double our earlier estimates (of GDP hit from higher tariffs).”
Pressure tactics by Trump?
Experts interpret this decision by the Trump administration as a strategic move to influence India’s position regarding US demands in the proposed India-US trade deal.The United States seeks reduced duties on various products, including industrial goods, automobiles (particularly electric vehicles), wines, petrochemicals, agricultural products, dairy items, apples, tree nuts and genetically-modified crops.Both countries aim to finalise the initial phase of the agreement by October-November this year.Also Read | Tariff trap: Trump targets India to pressure Putin – But US may pay the priceTrump’s desire to build pressure on Russia to end the war on Ukraine are also seen to be weighing on sentiment. Experts believe that by threatening countries that import the high amounts of crude oil from Russia, Trump may stop a crucial trade lifeline for Russia.
How India reacted to 50% tariffs by Trump
India reacted strongly to America’s move, calling it very unfortunate. The ministry of external affairs issued a statement saying that India has previously clarified its stance on these matters, emphasising that oil procurement decisions are driven by market conditions and are essential for securing energy needs of India’s 1.4 billion population.
EU purchases down, but not over
It is particularly concerning that the US has opted to levy additional tariffs on India, whilst other nations undertaking similar actions in their national interest face no such consequences, India noted.“We reiterate that these actions are unfair, unjustified and unreasonable. India will take all actions necessary to protect its national interests,” the statement said.
