In a dramatic escalation of trade tensions, US President Donald Trump signed an Executive Order on 27 July imposing a steep 50 per cent tariff on all Indian imports, citing New Delhi’s continued reliance on Russian oil. The measure places India and Brazil as the most heavily taxed trading partners of the United States, ahead of nations like China, Pakistan, and Bangladesh. The tariff is scheduled to rise by an additional 25 per cent after 21 days, on 27 August, unless negotiations yield a resolution.
India Joins Brazil at the Top of US Tariff List
The order, signed a day earlier on 26 July, doubles the tariff rate on Indian goods entering the US market, drawing sharp criticism from Indian authorities. According to The Hindu, India and Brazil now face the highest tariffs—50 per cent—followed by Switzerland at 39 per cent and Canada at 35 per cent. Surprisingly, China, the world’s largest purchaser of Russian oil, faces a comparatively lower 30 per cent tariff, raising suspicions that India was selectively targeted.
Pakistan and Bangladesh Favoured as Strategic Relations Shift
Tariffs on Pakistan and Bangladesh remain relatively low, at 19 per cent and 20 per cent respectively. Observers link this favourable treatment to a warming of ties between Washington and Islamabad, evidenced by an impending second official visit to the US by Pakistan Army Chief General Asim Munir.
Oil at the Heart of the Dispute
At the centre of the controversy is India’s growing dependence on Russian crude oil, projected to account for 38 per cent of its total crude imports in 2025—a sharp rise since the Ukraine conflict. India has used Russian oil to stabilise domestic fuel prices and shield its population from global energy shocks, particularly following recent Iran-Israel tensions.
President Trump has repeatedly accused Moscow of funding its war efforts in Ukraine through energy revenues, and views India’s continued purchases as indirectly supporting Russian aggression.
India Slams Move as “Unjustified and Hypocritical”
The Indian Ministry of External Affairs swiftly condemned the US decision, calling it “unfair, unjustified and unreasonable.” Officials pointed out that Western nations, including the US and EU, still conduct extensive trade with Russia. In 2025, the EU is expected to import 37 per cent of Russia’s pipeline gas and half of its liquefied natural gas, while the US continues buying Russian uranium and fertilisers.
India accused the West of “double standards,” saying it was being penalised for policies others quietly pursue.
Impact on Indian Exports Could Be Severe
The new tariff threatens to cripple India’s $87 billion export market to the US, particularly impacting labour-intensive sectors such as textiles, leather, and seafood—key industries within the micro, small, and medium enterprise (MSME) ecosystem. According to the Global Trade Research Initiative, exports to the US could decline by 40–50 per cent, cutting India’s GDP growth by 0.5 per cent and pulling FY 2025–26 projections below 6 per cent.
Pharmaceuticals and electronics, however, have been exempted, preserving key elements of the global supply chain.
Geopolitical Undercurrents and US Pressure Tactics
Experts interpret the tariff as a strategic pressure tactic aimed at coercing India to reduce its Russian oil intake and make concessions in ongoing trade negotiations, particularly in agriculture and dairy. The announcement comes as Prime Minister Narendra Modi prepares to visit Beijing for a BRICS-related security summit—an indication that India may be realigning itself more closely with Russia and China.
India Signals Resistance, Sets 21-Day Window
In response, Indian authorities have announced a 21-day window for dialogue, signalling that they will consider protective measures for exporters rather than direct retaliatory tariffs. Subsidies, low-interest export credit, and industry-specific support are under discussion.
Speaking at the M.S. Swaminathan Centenary Conference, Prime Minister Modi declared, “India will not put its farmers and fishers at risk, even at the expense of my own self,” reaffirming his commitment to safeguard vulnerable sectors from the fallout.
A Larger Geopolitical Realignment?
Analysts warn that the tariff move may signal a deeper geopolitical shift. As the US aligns more closely with Pakistan and maintains leniency towards China, India must now navigate a complex balancing act between protecting its economic interests and preserving its strategic autonomy.
The coming weeks will be crucial as both nations attempt to defuse rising tensions without permanently damaging their bilateral trade ties.