Trump hikes India tariffs to 50% over Russian oil imports

President Donald Trump has raised U.S. tariffs on India to 50% by imposing an additional 25% import tax, citing the country’s continued purchases of Russian oil [1]. The move, announced via executive order, comes amid broader U.S. efforts to enforce sanctions against Russia following its invasion of Ukraine. The new tariffs are set to take effect 21 days after the order was signed, giving both India and Russia a limited window to negotiate with the U.S. administration [2].

The impact of the 50% tariff is expected to be significant. India, seen by many U.S. firms as a potential alternative to China for offshoring manufacturing, now faces a major obstacle in maintaining export competitiveness to American markets. Analysts predict that the tariffs could reduce Indian exports to the U.S. by 40%-50%, affecting key sectors such as pharmaceuticals, textiles, and jewelry [6]. This could deter companies from shifting production to India, complicating its ambitions to become a global manufacturing hub [7].

India has responded by calling the additional tariffs “unfortunate,” with Foreign Ministry spokesperson Randhir Jaiswal describing them as “unfair, unjustified and unreasonable.” The Indian government emphasized that its energy purchases are based on market conditions and the need to ensure energy security for its 1.4 billion people. Jaiswal added that India would take all necessary steps to protect its national interests [1].

The U.S. and India have long maintained a complex relationship, balancing strategic cooperation with economic competition. In 2024, the U.S. recorded a $45.8 billion trade deficit with India, importing a wide range of goods including pharmaceuticals and textiles [6]. Despite diplomatic efforts by the Biden administration to encourage India to join Western efforts to limit Russian oil sales, New Delhi has opted to prioritize its own energy security and strategic neutrality in the Ukraine conflict [1].

Trump’s decision has drawn criticism from some former Indian trade officials. Ajay Srivastava, a former Indian trade official, called the tariffs “hypocritical,” noting that China imported more Russian oil than India in 2024 but has not faced similar measures. He argued that Washington avoids targeting Beijing due to its critical role in the global supply chain for minerals essential to U.S. defense and technology sectors [1].

The tariff hike also marks a departure from earlier U.S. policies. In 2022, the G7 introduced a price cap of $60 per barrel on Russian oil to limit revenue for the invasion of Ukraine. While the strategy aimed to weaken the Russian economy, the policy has largely failed as Moscow has found ways to circumvent the cap through shadow fleets and non-sanctioned insurers [1].

In addition to the India tariffs, Trump has signaled a broader strategy to reshape U.S. trade policy. He has indicated plans to impose a 100% tariff on imported computer chips, though specific exemptions for major firms are under consideration [8]. This move, along with the recent IEEPA-driven 10% tariffs on imports from non-sanctioned countries, underscores a shift toward using tariff policy as a tool of industrial and geopolitical influence [9].

The combined effect of these policies could strain U.S.-India trade relations and alter global manufacturing dynamics. As U.S. companies face increasing costs and supply chain uncertainty, some may explore other alternatives to China, potentially diminishing India’s role as a preferred relocation destination. Trump’s approach appears to be part of a broader strategy to assert U.S. dominance in global trade, using tariffs as a lever to enforce foreign policy goals.

India, however, is unlikely to back down easily. Having consistently prioritized its national interests over external pressure, the country is expected to continue its energy strategy, even if it risks further trade tensions with the U.S. The unfolding situation highlights the growing complexities of global trade in an era of geopolitical realignment.

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Sources:

[1] Trump doubling tariffs on India to 50% as punishment... (https://www.12news.com/article/news/nation-world/trump-import-taxes-india/507-092cd3a7-83a9-466e-9b3f-425bc9e4811c)

[2] Trump to put additional 25% import taxes on India | Money (https://www.news8000.com/lifestyle/money/trump-to-put-additional-25-import-taxes-on-india-bringing-combined-tariffs-to-50/article_25d5fc36-e56c-5076-86bb-1574103a9b60.html)

[6] Trump adds 25% tariff on India over Russian oil purchases (https://www.lemonde.fr/en/united-states/article/2025/08/06/trump-adds-25-tariff-on-india-over-russian-oil-purchases_6744127_133.html)

[7] Trump cranks up India tariffs to 50% in an attempt to pressure... (https://sg.finance.yahoo.com/news/trump-cranks-india-tariffs-50-170243662.html)

[8] Trump Eyes 100% Chips Tariff, Exempting Firms... (https://www.bloomberg.com/news/articles/2025-08-06/trump-plans-100-tariff-on-chips-with-carveout-for-apple-others)

[9] Tariffs in the second Trump administration (https://en.wikipedia.org/wiki/Tariffs_in_the_second_Trump_administration)