US slaps 25% extra tariff on Indian goods for Russian oil purchases; New Delhi reacts

India on Wednesday hit out at the United States’ decision to impose steep new tariffs on Indian exports, calling the move “unfair, unjustified and unreasonable,” after President Donald Trump signed an executive order targeting New Delhi’s continued imports of Russian oil.

The US administration issued the executive order under the title ‘Addressing Threats to the US by the Government of the Russian Federation’, slapping an additional 25% ad valorem duty on most Indian goods. This new levy comes on top of an existing 25% tariff, bringing the total to 50%, the highest level imposed on any US trading partner alongside Brazil.

The White House said the measure was in direct response to India’s purchases of discounted Russian crude, which surged following Moscow’s 2022 invasion of Ukraine. In July alone, India imported 1.6 million barrels per day of Russian oil, over 30% of its total daily imports.

“I find that the Government of India is currently directly or indirectly importing Russian Federation oil,” Trump stated in the order. “Accordingly... articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent.”

The Ministry of External Affairs (MEA), in a sharp response to the development, said India’s energy imports are determined by market dynamics and guided by the overriding goal of ensuring energy security for its 1.4 billion citizens.

“It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest.”

The ministry said that India would “take all actions necessary to protect its national interests.”

On Monday, the ministry defended India’s energy trade with Moscow, asserting that New Delhi would “take all necessary measures” to protect its national interests.

New Delhi pointedly highlighted the West’s apparent hypocrisy over ongoing trade with Russia, noting that both the US and EU continue to engage in substantial economic activity with Moscow.

The statement revealed that in 2024, the European Union recorded goods trade with Russia worth €67.5 billion, along with €17.2 billion in services the previous year. EU imports of Russian liquefied natural gas (LNG) hit a record 16.5 million tonnes in 2024, surpassing 2022 levels.

“The very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion,” the statement read.

The ministry also cited US imports of Russian uranium, palladium, fertilisers, and chemicals, underscoring that India’s own purchases are “meant to ensure predictable and affordable energy costs to the Indian consumer.”

The new tariff is expected to severely impact key Indian export sectors, including textiles, leather, marine products, gems and jewelry, and chemicals. The Federation of Indian Export Organisations (FIEO) described the announcement as a major blow to India’s exporters.

“It is extremely shocking. It will impact India’s 55% of exports to the US,” FIEO Director General Ajay Sahai said.

Exporters now fear that the increased tariff will make Indian goods significantly less competitive compared to regional rivals such as Vietnam, Indonesia, and Bangladesh, which face lower duties ranging from 20% to 36%.

A small list of Indian goods, including pharmaceuticals, energy products, and advanced electronics, will be exempt from the tariff.

The timing of the announcement is likely to complicate ongoing efforts to finalise a bilateral trade agreement between the two nations. A US delegation is scheduled to visit New Delhi on August 25 for the sixth round of negotiations on the proposed Bilateral Trade Agreement (BTA), with both sides aiming to conclude the first phase by October or November.

The announcement is being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed BTA.

The US is seeking duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, petrochemical products, agri goods, dairy items, apples, tree nuts, and genetically-modified crops.