Trump's New Tantrum: India Hit With 75 Per Cent Tariffs Over Iran Trade

US President Donald Trump’s latest announcement of a 25 per cent tariff on countries trading with Iran is a massive blow to India. In addition to the existing 50 per cent levy, the additional 25 percent will take tariffs on Indian goods to a high of 75 per cent. But government sources brushed off concerns saying that India’s trade with Iran is miniscule and so the overall effect on the economy will be minimal.

Trump’s announcement comes as Iran enters its third week of anti-regime protests, which are being put down with an iron hand by the Supreme Leader Ayatollah Ali Khamenei’s forces. Besides exerting economic pressure through sanctions, Trump is also mulling a military option, including missile strikes, to dislodge an already vulnerable regime. He is scheduled to meet his security team later on Tuesday to take a final call. While Trump said the order is “effective immediately” in a post on Truth Social, the tariffs are expected to take time to be fully implemented.

Officials point out that Iran does not figure in the list of India’s top 50 global trading partners. Last year, India's total trade with Iran was a mere $1.6 billion, which is approximately 0.15% of India's total trade.

Iran's total imports were about $68 billion in 2024 of which its leading import partners were UAE ($21 billion - 30%), China ($17 billion - 26%), Turkiye ($11 billion - 16%), EU ($6 billion - 9%). India’s share is only $1.2 billion - (2.3%). The US had earlier exempted the Chabahar port, jointly developed by Iran, India and China, from sanctions. It remains unclear whether that exemption still stands. The US embassy in New Delhi has yet to comment.

India, once one of the biggest buyers of Iranian oil, stopped imports in mid-2019 following sanctions imposed during Trump’s first term. Whether New Delhi will now halt all trade with Iran following Trump’s latest move remains an open question.

China, which lifts nearly 90 per cent of Iranian oil, also faces serious consequences. US-China ties, which were gradually being normalised, now face a fresh hurdle. Beijing immediately spoke out against the move. In a post on X, the spokesperson of the Chinese embassy in Washington said China “firmly opposes any illicit unilateral sanctions and long-arm jurisdiction,” warning it would take “all necessary measures” to defend its interests.

While the stated aim of the new tariffs announced is to further squeeze the Khamenei government, the impact will be felt most by Iran’s main trading partners. Earlier, India was burdened with a 25 per cent levy for purchasing Russian oil and was accused by Trump and senior cabinet officials of fuelling Russia’s war machine in Ukraine. New Delhi now faces another round of tariffs, this time linked to Iran’s crackdown on protesters. In effect, India is being asked to shoulder the costs of Trump’s foreign policy — first over Russia and now over Iran.

The move comes at a particularly difficult moment for India-US ties, already under strain following earlier tariffs and Trump’s claims that he played a role in halting the India-Pakistan conflict last May. However the arrival of US ambassador-designate Sergio Gor, who spoke of the “enduring friendship between our two nations” and his leader’s strong rapport with Prime Minister Narendra Modi, may be the starting point for rebuilding ties.

“The US and India are bound not just by shared interests, but by a relationship anchored at the highest levels. Real friends can disagree but always resolve their differences in the end,” he said.

India seems ready to sacrifice its relations with Iran as it looks to tie-up a bilateral trade agreement with the US.