India to pay 25% tariff plus penalty for Russian oil, defence buys: Trump

US President Donald Trump described India's trade policies as the 'most strenuous and obnoxious non-monetary trade barriers of any country'

US President Donald Trump on Wednesday announced a 25 per cent tariff on Indian goods, citing high trade barriers and India's purchases of energy and military equipment from Russia.

 

He also described India's trade policies as the 'most strenuous and obnoxious non-monetary trade barriers of any country'.  

 

In a post on Truth Social on Wednesday, Trump wrote, "Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country."

 

 

He added, "Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25 %, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!" 

 

Trump's announcement comes barely two days before the end of the tariff pause, scheduled to expire on August 1. Incidentally, the US had on Tuesday announced that the tariff pause would continue with China.   Following his post, White House economic adviser Kevin Hassett told reporters, "Trump has been frustrated with how trade talks with India are progressing and believes his 25 per cent tariff announcement will help the situation."   

The US has also been pressing India to commit to not reintroducing the so-called 'Google tax' -- a 6 per cent equalisation levy on online advertising services provided by non-resident entities -- while New Delhi is seeking protection from potential future tariffs on pharmaceutical exports.  The new tariff rates are expected to impact India's goods exports to the US, estimated at around $87 billion in 2024; the US currently runs a $45.7 bn trade deficit with India. 

India-US trade talks 

Indian officials have been engaged in a series of talks with their US counterparts to resolve the tariff issues and to reach an interim trade deal. Both sides have completed five rounds of negotiations, with the sixth one scheduled for late August. A key sticking point in the talks has been the Indian side's stance on not allowing genetically-modified (GM) crops and American dairy products, given the political and economic sensitivities around India's sprawling agriculture and dairy sectors. Meanwhile, despite the announcement of 25 per cent tariffs, India remains engaged with the US on a trade deal, Reuters reported on Wednesday, quoting an unnamed government source.   Indian government officials had been planning to continue negotiating for a bilateral trade deal by fall of this year, Bloomberg News reported earlier.    Earlier this week, Trump expressed cautious optimism about trade discussions with India, describing them as “promising” and potentially very favourable for the United States. Speaking aboard Air Force One, Trump reiterated concerns about India’s high tariff structure but said, “I think the trade deals are working out very well. Hopefully for everybody, but for the United States, they're very, very good.”

 

On the Indian side, officials have maintained a positive outlook on the negotiations. Union Commerce Minister Piyush Goyal described the talks as “productive” and said India is approaching them from “a position of strength.” Foreign Secretary Vikram Misri also confirmed that engagement on a trade pact is ongoing and steady.  The US, however, had been pushing India to commit to an immediate elimination  of customs duties on most products as soon as trade deal took effect, with zero duty on most of its products except a few tariff lines that could be phased out in a year or two.  India's key exports to the US straddle such diverse sectors as IT services, pharmaceuticals, electronic and auto components, gems and jewellery, textiles and apparel, and marine products, particularly shrimp.