Trump's Armtwist: Tariff On India Raised To 50 Per Cent Over Russian Oil

United States President Donald Trump on Wednesday levied an additional 25 per cent tariff on Indian exports as a penalty for India’s continued purchase of Russian oil. This takes the total tariff to 50 per cent.

According to PTI, Trump signed an executive order imposing the additional tariff less than 14 hours before his initial tariffs were to come into effect.

While the initial duty was to become effective on August 7, the additional levy will come into effect after 21 days—at the end of the month.

This decision comes a day after Trump disclosed in an interview with CNBC that he would impose additional tariffs on India “in the next 24 hours”.

He said, "India has not been a good trading partner, because they do a lot of business with us, but we don't do business with them. So we settled on 25 per cent, but I think I'm going to raise that very substantially over the next 24 hours, because they're buying Russian oil. They're fueling the war machine."

According to PTI, the announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed bilateral trade agreement (BTA). A US team is scheduled to visit India from August 25 for the sixth round of negotiations for the proposed BTA.

White House Statement

A White House statement signed by Trump reasoned that the tariff is being imposed due to the ongoing conflict in Ukraine and the “continued Russian Federation efforts to undermine the sovereignty and territorial integrity of Ukraine”. The statement addressed the conflict as “an unusual and extraordinary threat to the national security and foreign policy of the United States,” thus justifying the prohibition of trade in certain Russian products by other countries, including India.

The statement said, “I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil.”

It detailed the new rate of duty shall be effective for goods shipped or delivered after 12:01 a.m. eastern daylight time, 21 days after today (with certain exceptions).

Warning To Other Nations

The statement also said that the United States will monitor Russian oil imports by other countries and levy tariffs on them.

The secretaries of Commerce, State and Treasury, and other senior official “shall determine whether any other country is directly or indirectly importing Russian Federation oil” and “shall recommend whether and to what extent I should take action… including whether I should impose an additional ad valorem rate of duty of 25 percent on imports of articles of that country”, the statement said.

Ministry Of External Affairs Statement

the Official Spokesperson stated that the United States has recently targeted India’s oil imports from Russia. The spokesperson noted that India’s oil imports are based on market factors and are aimed at ensuring energy security for a population of 1.4 billion.

The statement added that the U.S. has imposed additional tariffs on India in response to these imports, and that similar actions are being taken by other countries based on their own national interests. The spokesperson said that India will take all necessary actions to protect its national interests.

Rahul Gandhi Takes A Dig

Taking to X, Opposition leader, Rahul Gandhi wrote, "Trump’s 50% tariff is economic blackmail - an attempt to bully India into an unfair trade deal. PM Modi better not let his weakness override the interests of the Indian people".

In another tweet addressed to Indian citizens, he wrote, "The reason PM Modi cannot stand up to President Trump despite his repeated threats is the ongoing U.S. investigation into Adani."

Among other reactions to the tariff, Federation of Indian Export Organisations (FIEO) DG Ajay Sahai said, "It is extremely shocking. It will impact India's 55 per cent of exports to US." 

Reserve Bank Governor Sanjay Malhotra said he does not see "major impact" of US tariffs on the domestic inflation.

According to PTI, Malhotra said there can be some impact if India retaliates with tariffs, but was quick to add that he does not see the same coming.

"As of now, we don't see a major impact of this unless we have retaliatory tariffs and so on and so forth which I do not foresee," Malhotra said, replying to a specific question on the impact of tariffs.

The Leader of Opposition in Lok Sabha, Rahul Gandhi, said, "(Donald) Trump’s 50 per cent tariff is economic blackmail -- an attempt to bully India into an unfair trade deal." "PM Modi better not let his weakness override the interests of the Indian people," Gandhi said in a post on X.

Noting that US President Donald Trump has hit India "hard and unjustly", Congress general secretary (communications), Jairam Ramesh, called for a comprehensive reset of India's foreign policy and said Prime Minister Modi should shed his ego and take inspiration from Indira Gandhi in the manner she stood up to the US' "bullying" in the 1970s.

"Now President Trump, while still claiming to be a friend of Mr Modi, has hit India hard and unjustly. While his tariff and penalty actions are simply unacceptable, the fact remains that they also reflect the abysmal failure of Mr Modi's personalised and headline-grabbing style of huglomacy," Ramesh said in a post on X.

Deputy Governor Poonam Gupta added that a majority 50 per cent of India's consumer price inflation (CPI) basket is food items, which have very limited exposure to global developments. She stated that a significant weightage of non-tradeable items in the basket is not impacted by global developments like tariffs.

"So, to that extent, the first order direct impact of these evolving uncertainties on India's inflation is likely to be very, very limited," Gupta said.

Senior Vice President of the Asia Society Policy Institute (ASPI) and former Deputy US Trade Representative Wendy Cutler suggested that officials in Delhi and Washington should try to work out their differences in private.

PTI reported Cutler said, "Regrettably, the US-India dispute is escalating, with the President now threatening an additional 25 per cent tariff. This will essentially cut off most Indian exports to the US."

She said this turnaround in bilateral relations has occurred quickly, and neither side can afford to be at odds with each other.