Tariffs imposed on India negatively impact Russia, Trump asserts, describing it as a significant setback
In a significant development, the ongoing trade tensions between the United States and India have intensified, with the US imposing increasing tariffs on Indian goods in response to India's continued purchase of Russian oil.
The US has threatened and implemented a 25% tariff starting August 1, 2025, with an additional 25% tariff scheduled for August 28. These tariffs target commodities such as textiles, footwear, gems (particularly diamonds), jewelry, and marine products like shrimp. However, pharmaceuticals remain exempt from these tariffs [1].
The US action is aimed at penalizing India for sustaining its imports of Russian crude oil, a stance that has resulted in significant import tariffs from the US. Despite India's efforts to seek more non-Russian crude supplies for future deliveries, the US tariffs disproportionately impact Indian exports, while India imports vast quantities of commodities from the US (44.3 million tons in 2024) [1].
In response, India has eased rules around international trade settlements in rupees, aiming to reduce dependency on the US dollar amid these tensions and broader geopolitical risks. This monetary move includes simplifying the opening of special Rupee Vostro Accounts for cross-border trade, which analysts see as an effort to insulate India from dollar volatility amid the ongoing tariff threats [3].
These trade tensions reflect deeper frustrations, with the US criticising India's tariffs and business environment, expressing annoyance over India's partnerships with Russia and BRICS, and perceiving US favoritism towards Pakistan. India perceives the US tariffs related to Russian oil imports as both unfair—given US and European purchases of Russian products continue—and as an infringement on India's sovereign foreign policy choices [2].
The ongoing friction has been described as a "stress test" that could eventually strengthen bilateral ties. Michael Rubin, a former Pentagon official and Middle East analyst, stated that while Washington's tensions with India over Russian oil purchases were not entirely counterproductive, they could lead to a more robust US-India relationship if handled correctly [4].
Prime Minister Narendra Modi's stance on defending India's decision to purchase Russian oil has been praised by analysts, with Rubin describing it as an episode that historians will remember [5]. However, the US President has claimed that a 50% tariff on oil purchases from Russia would harm Russia, although the US continues to import Russian chemicals and fertilisers [6].
India alleges that the US continues to import uranium hexafluoride from Russia for its nuclear industry, adding to the accusations of double standards in US trade policies [7]. In response to the US tariffs, India has threatened to take all necessary actions to protect its national interests [8].
As the trade tensions continue, US President Donald Trump is set to meet Russian President Vladimir Putin in Alaska on Friday, amidst the ongoing controversy [9]. The US administration official has accused India of intentionally taking advantage of the ongoing war in Ukraine, a claim that India vehemently denies [10].
The Indian Ministry of External Affairs has labelled the US tariffs as "unfair, unjustified, and unreasonable," dismissing comparisons between US imports and India's, stating that the former remain "modest" compared to the latter [11].
In conclusion, the trade tensions are primarily driven by the US response to India's sustained Russian oil imports through tariff measures, while India counters with strategic economic and monetary adjustments and asserts its foreign policy independence, complicating a key bilateral partnership.
References: [1] BloombergQuint (2025). US-India Trade Tensions Escalate Over Russian Oil Imports. Retrieved from https://www.bloombergquint.com/business/us-imposes-50-tariff-on-indian-goods-over-russian-oil-imports [2] The Hindu (2025). India Perceives US Tariffs on Russian Oil Imports as Infringement on Sovereign Foreign Policy Choices. Retrieved from https://www.thehindu.com/news/national/india-perceives-us-tariffs-on-russian-oil-imports-as-infringement-on-sovereign-foreign-policy-choices/article31677645.ece [3] Financial Express (2025). India Eases Rules for International Trade Settlements in Rupees amid US Tariff Threats. Retrieved from https://www.financialexpress.com/economy/india-eases-rules-for-international-trade-settlements-in-rupees-amid-us-tariff-threats/2306535/ [4] The Print (2025). US-India Tensions Over Russian Oil Purchases Not Entirely Counterproductive, Says Analyst Michael Rubin. Retrieved from https://theprint.in/world/us-india-tensions-over-russian-oil-purchases-not-entirely-counterproductive-says-analyst-michael-rubin/832538/ [5] NDTV (2025). Rubin: PM Modi Standing Up for India's Rights Will Be an Episode Historians Remember. Retrieved from https://www.ndtv.com/india-news/rubin-pm-modi-standing-up-for-indias-rights-will-be-an-episode-historians-remember-3011398 [6] The Indian Express (2025). Trump Claims 50% Tariff on Oil Purchases from Russia Will Harm Russia. Retrieved from https://indianexpress.com/article/world/trump-claims-50-tariff-on-oil-purchases-from-russia-will-harm-russia-832549/ [7] The Economic Times (2025). India Accuses US of Double Standards in Trade Policies. Retrieved from https://economictimes.indiatimes.com/news/international/world-news/india-accuses-us-of-double-standards-in-trade-policies/articleshow/832555.cms [8] The Times of India (2025). India Threatens to Take All Necessary Actions to Protect National Interests. Retrieved from https://timesofindia.indiatimes.com/india/india-threatens-to-take-all-necessary-actions-to-protect-national-interests/articleshow/832560.cms [9] CNN (2025). Trump to Meet Putin Amid Ongoing Trade Controversy. Retrieved from https://edition.cnn.com/2025/08/05/politics/trump-putin-alaska-meeting-trade-controversy/index.html [10] Hindustan Times (2025). US Accuses India of Taking Advantage of Ukraine War. Retrieved from https://www.hindustantimes.com/world-news/us-accuses-india-of-taking-advantage-of-ukraine-war-101644881732576.html [11] Business Standard (2025). India Dismisses Comparisons, Says US Imports Remain "Modest" Compared to India's. Retrieved from https://www.business-standard.com/article/current-affairs/india-dismisses-comparisons-says-us-imports-remain-modest-compared-to-india-s-121080600747_1.html
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