WASHINGTON: US President Donald Trump on Wednesday ordered an additional 25% tariff on Indian goods over New Delhi’s continued purchase of Russian oil, a key revenue source for Moscow’s war in Ukraine.
The tariff, set to take effect in three weeks, comes on top of a separate 25% duty entering into force on Thursday, according to the text of the executive order released by the White House.
The order also threatens potential penalties on other countries deemed to be “directly or indirectly importing Russian Federation oil.”
Exemptions remain for items targeted by separate sector-specific duties such as steel and aluminum, and categories that could be hit like pharmaceuticals.
Trump has been ramping up pressure on India after signaling fresh sanctions on Moscow if it did not make progress by Friday towards a peace deal with Kyiv, as Russia’s devastating invasion of its pro-western neighbor drags on.
India’s national security adviser was in Moscow on Wednesday, media in New Delhi reported, coinciding with a visit by US envoy Steve Witkoff.
Meanwhile, India’s external affairs ministry condemned additional US tariffs imposed over its Russian oil purchases as “extremely unfortunate”, calling the move “unfair, unjustified and unreasonable”.
“Our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India,” it said in a statement.
“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.”
Trade analysts warned the tariffs could severely disrupt Indian exports. The additional 25% tariff comes into effect 21 days after August 7, the order said.
“With such obnoxious tariff rates, trade between the two nations would be practically dead,” said Madhavi Arora, economist at Emkay Global.
Indian officials have privately acknowledged growing pressure to return to the negotiating table. A potential compromise could involve a phased reduction in Russian oil imports and diversification of energy sources.
A senior Indian official said New Delhi was blindsided by the sudden imposition of the new levy and the steep rate, as both countries continue to discuss trade issues.
Trump’s decision follows five rounds of inconclusive trade negotiations, which stalled over US demands for greater access to Indian agriculture and dairy markets.
India’s refusal to curb Russian oil purchases — which surged to a record $52 billion last year — ultimately triggered the tariff escalation.
“Exports to the US become unviable at this rate. Clearly, risks to growth and exports are rising, and the rupee may face renewed pressure,” said Garima Kapoor, economist at Elara Securities. “Calls for fiscal support are likely to intensify.”
Trump’s executive order does not mention China, which also buys Russian oil. A White House official had no immediate comment on whether an additional order covering those purchases would be forthcoming.
US Treasury Secretary Scott Bessent last week said he warned Chinese officials that continued purchases of sanctioned Russian oil would lead to big tariffs due to legislation in Congress, but was told that Beijing would protect its energy sovereignty.
The US and China have been engaged in discussions about trade and tariffs, with an eye to extending a 90-day tariff truce that is due to expire on August 12, when their bilateral tariffs shoot back up to triple-digit figures.
— With additional input from Reuters