Trump hits India with 25% tariff plus penalty; will secure our interest: Govt

US President Donald Trump on Wednesday slapped a 25 per cent tariff on imports from India which, he said, will come into effect starting August 1 and also threatened an additional penalty for buying oil and military equipment from Russia amid the ongoing Ukraine war.

In the first reaction to Trump’s announcement, the government said it was studying the implications of Trump’s statement and would take all steps necessary to secure national interests.

“We have a massive trade deficit with India… All things not good? India will therefore be paying a tariff of 25 per cent, plus a penalty for the above, starting on August 1,” Trump said on Truth Social in a surprise move just a day after officials here revealed that a US team would visit India on August 25 to finalise the first tranche of a bilateral trade agreement under negotiation.

In a measured response, India said the government has been engaged in negotiations for a fair trade deal with the US and attaches top importance to the interests of farmers.

“The government has taken note of a statement by the US President on the bilateral trade. The government is studying its implications. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," a statement from the Commerce Ministry said.

It added that the government attached utmost importance to protecting and promoting the welfare of farmers, entrepreneurs and MSMEs.

“The government will take all steps necessary to secure our national interests, as has been the case with other trade agreements, including the latest pact with the UK," the ministry said, signalling an unwillingness to offer concessions on the dairy and agri sector which Trump wants. Sources viewed Trump’s announcement as a tactic to pressure India into further concessions.

If implemented, the 25 per cent tariff will raise the cost for Indian exporters, particularly in sectors like textiles, gems and jewellery and electronics.

The US is India’s top export destination, with nearly 20 per cent share in the country’s total outbound shipments. India exported goods worth $86.51 billion to the US in 2024-25 and had a trade surplus of $40.82 billion during the period.

Trump, meanwhile, underlined that “India is our friend” but said Washington had done relatively little business with New Delhi due to high tariffs and non-tariff barriers.

“Their (India) 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 said.

Trump further said India had “always bought a vast majority of 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 ‘killings’ in Ukraine.”

Russia is India’s top oil supplier, with total imports surging to 33.4 per cent in 2023-24 from a mere two per cent in 2021-22. In the first half of 2025, it was the top crude supplier to India with 1.67 million barrels per day.

According to oil expert Narendra Taneja, the immediate result of disruption in Russian oil supply would be a rise in crude prices. “This is something the global or the Indian economy cannot afford. Global oil prices are extremely sensitive to supply chains. Nearly 5 million barrels of oil from Russia flow to the world every day and we are a major importer," he said.

Earlier today, External Affairs Minister S Jaishankar, participating in the debate on Operation Sindoor in the Rajya Sabha, said India was negotiating a trade deal with the US which would serve New Delhi’s interests.

India and the US had announced negotiations for a bilateral trade agreement in February, with the aim to enhance trade and investment ties targeting a doubling of bilateral trade to $500 billion by 2030. So far, five rounds of talks have concluded and a US team is scheduled to visit India on August 25 for the sixth round of talks.

The experts termed the 25 per cent tariff on India as a little disappointing. “I think buyers and sellers will start negotiating and to see to what extent that can be absorbed. This in any case is for a limited period and as soon as India culminates the agreement, these rates can be brought down also," said Ajay Sahai, CEO, Federation of Indian Export Organisations.

Taneja said the announcement of a 25 per cent tariff could be a tactic to put pressure on India in terms of ongoing trade negotiations. “As of now, it is just a social media post, we have not seen whether he has signed an executive order or not," he said.

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