Trump announces "substantial" tariff hike on India over Russian oil purchases
By kevinhughes // 2025-08-07
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  • President Donald Trump announced a substantial increase in tariffs on imports from India within 24 hours, citing dissatisfaction with India's trade practices and its continued purchase of Russian oil.
  • The decision has led to a downgrade in India's GDP growth forecast for FY26 from 6.2 percent to 6.0 percent, with sectors like textiles, auto components and chemicals expected to be severely impacted, while pharmaceuticals and telecom instruments may remain stable.
  • Indian exporters are exploring alternative markets to mitigate the impact of U.S. tariffs, with some sectors considering trade hubs like Belgium and the United Arab Emirates, and others looking to diversify into the European Union, United Kingdom and Asia-Pacific markets.
  • India has vowed to protect its national interests, while Russia has backed India, condemning U.S. pressure tactics as illegitimate. The U.S. move risks damaging the growing trade relationship between the two nations, with bilateral trade reaching $131.8 billion in the 2024-25 fiscal year.
  • The tariff hike underscores the complexities of international diplomacy and the balance between economic interests and geopolitical strategy, potentially setting a precedent for how the U.S. handles trade disputes with other nations maintaining ties with Russia.
In a dramatic escalation of trade tensions, President Donald Trump declared on Tuesday, August 5, that he will "substantially" raise tariffs on imports from India within the next 24 hours. The decision comes amid escalating criticism over India's continued purchases of Russian oil, which Trump claims are fueling Russia's war machine in Ukraine. During a phone interview with CNBC's "Squawk Box," Trump expressed his dissatisfaction with India's trade practices, labeling the country as the "highest tariff nation." He stated, "India has not been a good trading partner. They do a lot of business with us, but we don't do much with them." Despite India's offer to waive tariffs on United States imports entirely, Trump emphasized that this gesture was insufficient given the ongoing oil trade with Russia. (Related: Trump slaps India with 25% tariffs over Russia ties, sparking trade war fears.) The president justified the tariff hike by stating, "They're buying Russian oil, and they're fueling the war machine. If they are going to do that, I am not going to be very happy." This move follows Trump's earlier criticism, where he accused India of making "big profits" by selling Russian oil in the open market, showing indifference to the humanitarian crisis in Ukraine. The announcement has sent shockwaves through the global economic community. According to a report by rating agency ICRA, India's GDP growth forecast for FY26 has been revised downward from 6.2 percent to 6.0 percent, citing U.S. tariffs and uncertainty around potential penalties as key risks. The report identifies several sectors that are expected to be severely impacted, including textiles, auto components, tires, chemicals, agrochemicals, and cut and polished diamonds (CPD). However, some sectors may fare better. Pharmaceuticals, petroleum products and telecom instruments are expected to remain relatively stable, as they have been partially or fully exempted from the new tariffs. The report also noted that Indian exporters are exploring alternative markets to mitigate the impact, with CPD exporters potentially shifting to trade hubs like Belgium and the United Arab Emirates, while firms in other sectors are looking to diversify into the European Union, United Kingdom and Asia-Pacific markets.

International reactions and diplomatic fallout

India has responded firmly to the U.S. threat, with the Ministry of External Affairs (MEA) stating that India will "take all necessary measures to safeguard its national interests and economic security." The MEA clarified that India's imports of Russian oil began only after traditional suppliers redirected shipments to Europe following the Ukraine conflict. Furthermore, the MEA highlighted that the U.S. had initially supported India's imports from Russia to help stabilize global energy markets. Russia has backed India's position, with Kremlin spokesperson Dmitry Peskov condemning U.S. pressure tactics as "illegitimate." Peskov emphasized that sovereign nations should be free to choose their trading partners based on their own national interests. The tariff hike could have far-reaching implications for both economies. While the U.S. aims to pressure India into reducing its reliance on Russian oil, the move risks damaging the burgeoning trade relationship between the two nations. Bilateral trade between India and the U.S. reached 131.8 billion in the 2024-25 fiscal year, with a trade surplus of 41.18 billion for New Delhi. The decision to raise tariffs could set a precedent for how the U.S. approaches trade disputes with other nations, particularly those that maintain economic ties with Russia. Trump's announcement marks a significant moment in global trade dynamics, with potential repercussions that extend beyond the immediate economic impact on India. The situation underscores the complexities of international diplomacy and the delicate balance between economic interests and geopolitical strategy. Follow Trump.news for more news about the Trump administration's tariffs on trading partners. Watch the video below about President Trump unleashing tariffs on 185 nations. This video is from the NewsClips channel on Brighteon.com.

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