What’s happening
In a CNBC interview on August 5, 2025, U.S. President Donald Trump stated that “India has not been a good trading partner” and pledged to completely increase U.S. tariffs on Indian goods within 24 hours, citing India’s ongoing purchases of Russian oil as the main reason.
On August 1, an executive order imposed a 25% tariff on India. Trump did not provide a precise new percentage, but he now intends to raise this rate “very substantially.”
Why Trump is making this move
- He accuses India of undermining Western sanctions on Moscow by purchasing cheap Russian oil and purportedly reselling it for a profit, thus bolstering Russia’s war machine.
Trump also dismissed India’s proposal to reduce tariffs on American goods, claiming it was insufficient unless India stopped trading oil with Russia. 🇮🇳 India’s response
- The U.S. and EU continue to trade with Russia in other areas, including energy, fertilizers, and machinery, according to India’s Foreign Ministry, which denounced the tariff threats as unreasonable and cited double standards.
Indian officials defended their use of Russian oil, saying it is economically necessary and helps keep oil prices stable globally. They emphasized that India has the sovereign right to select its trading partners. Historical backdrop
- When PM Narendra Modi traveled to Washington in February 2025, he and Trump agreed on a “Mission 500” goal to boost collective trade to $500 billion by 2030. They also talked about energy agreements to close the trade gap.
Trump’s wider economic strategy included the imposition of massive “Liberation Day” tariffs on April 2, 2025, which imposed a 25% tariff on India because of concerns about trade disparities. Global tariffs for most countries start at 10%, with higher rates for important trading partners.
