U.S. imposes fresh tariffs on Indian goods in retaliation to business deals with Russia
In the global trade landscape of 2025, the U.S.-India trade relationship finds itself in a tense and deteriorating state. This situation stems from a series of recent U.S. tariff increases on Indian imports and political disagreements, particularly regarding India's stance on Russia amid the Ukraine conflict.
The U.S., under President Trump (in his second term as of 2025), has raised tariffs on Indian goods from an initial 25% to 50%. This escalation is a pressure tactic related to India’s trade red lines and its purchases of Russian energy. The tariff hike comes amidst deteriorating trust and diplomatic friction between the two countries, which also involves U.S. warming ties with Pakistan and criticism of India’s reluctance to condemn Russia’s invasion of Ukraine.
India's response to this economic pressure has been to strengthen trade ties with other countries. Notably, it has entered into free trade agreements with the UK, UAE, Australia, and the European Free Trade Association. India is also reportedly considering additional tariff concessions and negotiating potential deals involving U.S. liquefied natural gas (LNG) and defense purchases to ease tensions.
The tariff increase and political pressure by the U.S. are part of a broader U.S. trade policy to address what it views as unfair trade practices and national security concerns, enacted under Executive Order 14257. This order enables the U.S. to impose reciprocal tariffs on countries with whom it has large and persistent trade deficits and nonreciprocal tariff regimes.
Meanwhile, Russia has been waging an attack on Ukraine for more than three years, financing its war machine primarily through the sale of its resources, particularly fossil fuels like oil and gas. In June 2023, India became the second-largest buyer of Russian fossil fuels, spending 4.5 billion euros. A significant portion of this, 80%, was on oil.
The new U.S. tariffs, which will come into effect 21 days after the signing of the relevant decree, are aimed at weakening the economic foundation of the Kremlin by putting more pressure on major energy consumers like China and India. If the ceasefire between Moscow and Kyiv is not achieved, the U.S. has threatened sanctions against Russia's trading partners.
Last Tuesday (29 July), the U.S. President set a ten-day deadline and demanded a ceasefire between Moscow and Kyiv. It was considered highly unlikely that Putin would agree to Trump's demand for an end to the war in Ukraine.
Among the most exported goods from the United States to India were oil and gas, which India primarily imported. However, India primarily imported pharmaceuticals from the U.S. On the same day that the U.S. announced the tariffs on India, the U.S. special envoy, Steve Witkoff, held talks in Moscow.
Despite the current challenges, both the U.S. and India remain engaged in negotiations to prevent further deterioration in their trade relations. The goal is to find a balance that respects the interests of both nations while maintaining global peace and stability.
The U.S. President, in his second term in 2025, increased tariffs on Indian goods, particularly oil and gas, as part of a broader trade policy aimed at addressing perceived unfair trade practices. In response, India has been strengthening trade ties with other countries, including discussions about potential U.S. liquefied natural gas (LNG) purchases and defense deals to ease tensions.
Despite the escalating trade tensions, the U.S. remains engaged in talks with India to prevent further deterioration, aiming to find a balance that respects the interests of both nations and maintains global peace and stability. Meanwhile, India has increased its purchases of Russian fossil fuels, notably spending 80% of 4.5 billion euros on Russian oil in June 2023.
