WASHINGTON/NEW DELHI – The United States has dramatically escalated trade tensions with India, imposing a substantial new tariff on Indian goods as a direct consequence of New Delhi's continued importation of Russian crude oil. The move, confirmed by a White House executive order, has drawn a sharp and immediate condemnation from the Indian government, signaling a significant rift between the two strategic partners.
In an order signed Wednesday, an additional 25% ad valorem duty was levied on a wide range of Indian imports. This new tariff stacks on top of a separate 25% duty, effectively raising the total tariff rate to 50% for many Indian products entering the U.S. market. The administration has set a 21-day period before the new measures take full effect, a window that some analysts see as a final opportunity for negotiation.
The White House justified the punitive measure by linking India's energy trade to the ongoing conflict in Ukraine. A fact sheet accompanying the order stated that "India's importation of Russian Federation oil undermines U.S. efforts to counter Russia's harmful activities" and that the subsequent resale of refined products "further enables the Russian Federation's economy to fund its aggression."
In public statements, the U.S. President has been even more direct, accusing India of "fuelling the war machine." He has consistently criticized India's high tariff rates in general, but has recently focused on the Russian oil issue as a primary irritant in the trade relationship.
The response from New Delhi was swift and defiant. India's Ministry of External Affairs (MEA) released a strongly-worded statement calling the U.S. action "unfair, unjustified, and unreasonable."
"We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India," the MEA stated. "It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest."
The Indian government also highlighted what it perceives as "double standards," pointing out that other nations, including some in Europe, continue to engage in energy trade with Russia. The MEA concluded by asserting that "India will take all actions necessary to protect its national interests."
The tariffs are poised to deal a significant blow to Indian exporters, as the U.S. remains their largest single market. Industry bodies have voiced alarm, warning that the steep duties will make Indian goods, particularly in sectors like textiles, leather goods, and jewelry, uncompetitive compared to those from countries like Vietnam and Bangladesh.
Since the war in Ukraine began, India has dramatically increased its intake of discounted Russian crude, vaulting Russia to become one of its top suppliers. Indian officials have consistently defended this policy as a matter of economic necessity, crucial for managing inflation and meeting the energy demands of the world's most populous nation. This escalation follows several rounds of stalled trade negotiations, and it now pushes the complex U.S.-India relationship into turbulent and uncertain territory.
