As the deadline for new tariffs approached, US President Donald Trump went ahead with a 25 per cent tariff on Indian imports starting Friday, following stalled trade negotiations between the two countries.
The executive order, signed late Thursday, stopped short of imposing penalties for India’s Russian oil purchases or its BRICS membership, both of which Trump had previously threatened.
India had responded firmly to Trump’s initial warning, stating it ‘will take all steps necessary to secure our national interest’.
In the tariff order, Trump justified the decision by claiming that “large and persistent annual US goods trade deficits constitute an unusual and extraordinary threat to the national security and economy of the United States.”
India’s tariff rate was notably higher than the 15–19 per cent range set for most countries included in the order.
The new tariff takes effect from midnight US time (9:30 AM IST).
Despite India being among the first to enter negotiations with the US, talks appeared to have lost momentum.
While Trump made the 25 per cent threat public on Wednesday, he still hinted at ongoing discussions, stating, “We’re talking to India now, we’ll see what happens.”
Unlike with other nations, no formal communication was issued to India. It seems last-minute efforts failed to de-escalate the situation.
US Labels India a ‘Friend’, But Imposes Tariff
Throughout the talks, Trump continued to refer to India and Prime Minister Narendra Modi as ‘friends’. Just last week, he said a trade deal was ‘imminent’.
India’s Commerce Minister Piyush Goyal had also sounded hopeful, describing the talks as making ‘fantastic’ progress.
The order stated that some nations had offered proposals that failed to adequately address the US’s concerns on trade imbalances or align with its economic and national security goals.
While Myanmar faced the highest tariff at 41 per cent, Brazil and the UK received the lowest at 10 per cent.
Brazil’s low rate came despite earlier threats of a 50 per cent tariff due to political disputes.
Trump gave Mexico a temporary extension to continue negotiations, while Canada, though not named in the order, had already assigned a separate 30 per cent tariff.
A temporary deal with China remains in place until 12 August, with a current rate of 30 per cent, far lower than earlier threats of up to 145 per cent.
Pakistan will face a 19 per cent tariff, and both Sri Lanka and Bangladesh were assigned a 20 per cent rate.
One of the biggest sticking points in US-India talks has been Washington’s demand for wider access to India’s agriculture and dairy markets.
India has resisted, citing the impact on a sector that employs nearly half of its workforce.
In its earlier response, India emphasised the importance of protecting farmers, MSMEs, and entrepreneurs.
India’s Leverage Limited Without Investment Promises
Unlike the European Union and Japan, which offered large-scale investments in the US, India did not make such pledges, limiting its leverage in negotiations.
Rising tensions between Washington and Moscow may also draw India into the crossfire.
Trump criticised India’s Russian oil purchases on Wednesday, and the next day, New Delhi mentioned in a Truth Social post aimed at former Russian President Dmitry Medvedev.
Trump wrote, “I don’t care what India does with Russia. They can take their dead economies down together, for all I care.”
Trump has frequently targeted India’s trade policies, labelling it the ‘Tariff King’, a term India’s Finance Minister Nirmala Sitharaman has publicly rejected. Her February budget cut duties on premium motorcycles like Harley-Davidsons, a long-standing grievance for Trump.
India’s pharmaceutical exports to the US, valued at $12.7 billion last year, may also come under scrutiny.
Any tariff increase in that sector could raise healthcare costs in the US.
When asked about penalties on Russian oil purchases, which he once suggested could reach 100 per cent, Trump declined to give specifics. Instead, he floated the idea of penalties for BRICS membership, though such a move would likely affect China as well.
Any secondary sanctions linked to Russian oil or BRICS participation may be timed around an expected 7 August deadline for Russia to end its war in Ukraine.
Given China’s role as a Russian energy buyer, further escalation remains complex amid efforts to avoid a full-scale trade conflict.
Also Read: India’s Russian Oil Trade ‘A Point Of Irritation’, Says US Secretary Of State Marco Rubio
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