Trump says India will pay 25% tax plus penalty for Russian oil & defense purchases
US President Donald Trump has declared a 25 per cent tariff on Indian goods, referencing elevated trade barriers and India’s acquisitions of energy and military equipment from Russia. Trump called India’s trade obstacles the’most rigorous and outrageous non-monetary trade barriers of any country.
In a post on Truth Social on Wednesday, Trump wrote, “Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25 %, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!”
Trump’s announcement arrives just two days prior to the conclusion of the tariff pause, which is set to expire on August 1. On Tuesday, the United States announced that the suspension of tariffs on China would persist. In the aftermath of his statement, White House economic adviser Kevin Hassett conveyed to reporters, “Trump has been frustrated with how trade talks with India are progressing and believes his 25 per cent tariff announcement will help the situation.” The United States has been urging India to refrain from reinstating the so-called ‘Google tax’—a 6 percent equalization levy on online advertising services offered by non-resident entities—while New Delhi is advocating for safeguards against possible future tariffs on pharmaceutical exports. The anticipated tariff rates are likely to affect India’s goods exports to the US, projected at approximately $87 billion in 2024; the US presently maintains a trade deficit of $45.7 billion with India.
Indian officials have been involved in discussions with their US counterparts to address tariff concerns and to achieve an interim trade agreement. Negotiations have progressed through five rounds, with the sixth round anticipated for late August. A significant obstacle in the negotiations has been India’s position on prohibiting genetically-modified (GM) crops and American dairy products, reflecting the political and economic sensitivities surrounding the country’s extensive agriculture and dairy industries. In the interim, notwithstanding the declaration of 25 per cent tariffs, India continues to engage with the US regarding a trade agreement, as reported by Reuters on Wednesday, citing an unnamed government source.
Officials from the Indian government had been strategizing to persist in discussions for a bilateral trade agreement by the autumn of this year. Earlier this week, Trump conveyed a sense of cautious optimism regarding trade discussions with India, characterizing them as “promising” and potentially highly advantageous for the United States. While addressing the audience aboard Air Force One, Trump expressed his apprehensions regarding India’s elevated tariff framework, yet remarked, “I think the trade deals are working out very well.” It is to be hoped that this is beneficial for all, particularly for the United States, where the outlook appears exceptionally positive.
Indian officials have consistently expressed an optimistic perspective regarding the negotiations. Union Commerce Minister Piyush Goyal characterized the discussions as “productive” and indicated that India is entering them from “a position of strength.” Foreign Secretary Vikram Misri has affirmed that discussions regarding a trade pact are both ongoing and consistent. The United States, nonetheless, had been urging India to agree to an immediate removal of customs duties on the majority of products as soon as the trade agreement came into force, with a zero duty on most items except for a limited number of tariff lines that could be eliminated within a year or two. India’s principal exports to the US encompass a wide array of sectors, including IT services, pharmaceuticals, electronic and automotive components, gems and jewellery, textiles and apparel, as well as marine products, with a notable emphasis on shrimp.
