August 5, 2025 - In a fresh escalation of trade tensions, U.S. President Donald Trump announced on Tuesday his intent to "substantially" increase tariffs on Indian imports within the next 24 hours, citing India's continued purchase of Russian oil. The statement, made during a CNBC interview, follows a similar threat issued on Monday via Trump's Truth Social platform, which prompted a sharp response from India's Ministry of External Affairs (MEA).
In his latest remarks, Trump during the CNBC interview stated, “With India what people don’t like to say about is that they are the highest tariff nation. We do very very little business with India because their tariffs are so high. India has not been a good trading partner, because they do a lot of business with us, but we don't do business with them. So we settled on 25 percent but I think I'm going to raise that very substantially over the next 24 hours, because they're buying Russian oil." This follows his Monday post on Truth Social, where he wrote, "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don’t care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!! President DJT."
The Monday post came just days after Trump signed an executive order on July 31, imposing a 25% tariff on Indian goods effective August 7, alongside an unspecified penalty for India's trade with Russia. The U.S. administration has expressed frustration over India's purchase of Russian oil, accusing New Delhi of indirectly fuelling Russia's war efforts in Ukraine. Trump has also criticised India's high tariffs on U.S. goods, calling them "among the highest in the world" and labelling India's non-monetary trade barriers as "strenuous and obnoxious."
India's MEA responded swiftly on Monday, calling the U.S. threats "unjustified and unreasonable." The ministry highlighted that India's oil imports from Russia were necessitated by global market disruptions following the Ukraine conflict, noting that the U.S. had initially encouraged such imports to stabilise global energy markets. "Unlike our case, such trade [by the U.S. and EU with Russia] is not even a vital national compulsion," the MEA stated, pointing out that the European Union maintained significant trade with Russia, including €67.5 billion in goods in 2024. The ministry emphasised that India's energy procurement strategy prioritises affordable and stable supplies for its consumers, and it vowed to take "all necessary measures to safeguard its national interests and economic security."
The back-and-forth underscores growing friction in U.S.-India trade relations, despite ongoing negotiations for a bilateral trade deal. Indian officials, including Commerce Minister Piyush Goyal, have rejected Trump's claim that India's economy is "dead," asserting that India is the world's fastest-growing major economy and is on track to become the third-largest by 2030. Goyal has emphasised India's commitment to a "fair, balanced, and mutually beneficial" trade agreement, with talks reportedly progressing toward an interim deal by October.
The economic impact of the proposed tariff hike remains uncertain. Government sources in India have downplayed the effect of the 25% tariff, estimating barely any loss in GDP. Data says the U.S. is India's largest export market, with $86.51 billion in goods exported in the last fiscal year.
