US President Trump says imposing 25% tariff on Indian imports

President Donald Trump said on Wednesday the United States will impose a 25% tariff on goods imported from India starting on Aug.1.

He said India, which has the world's fifth largest economy, will also face an unspecified penalty on Aug.1, but did not elaborate on the amount or what it was for.

Trump said on his Truth Social platform that India "is our friend” but its "Tariffs are far too high” on US goods.

"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," Trump wrote in a Truth Social post.

"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's commerce ministry, which is leading the trade negotiations with the United States, did not immediately respond to a request for comment. Trump's decision dashes hopes of a limited trade agreement between the two countries, which had been under negotiation for several months.

The Republican president added that India buys military equipment and oil from Russia, which he said has enabled the war in Ukraine. As a result, he intends to charge an additional "penalty” starting on Friday as part of the launch of his administration’s revised tariffs on multiple countries.

The new tariffs could put India at a disadvantage in the US market relative to Vietnam, Bangladesh and, possibly, China, said Ajay Sahai, director general of the Federation of Indian Export Organisations.

"We are back to square one as Trump hasn’t spelled out what the penalties would be in addition to the tariff," Sahai said. "The demand for Indian goods is bound to be hit.”

US and Indian trade negotiators had held multiple rounds of discussions to resolve contentious issues, particularly over market access for American agricultural and dairy products.

Despite progress in some areas, Indian officials resisted opening the domestic market to imports of wheat, corn, rice and genetically modified soybeans, citing risks to the livelihood of millions of Indian farmers.

The new tariffs are expected to impact India's goods exports to the US, estimated at around $87 billion in 2024, including labour-intensive products such as garments, pharmaceuticals, gems and jeweler, and petrochemicals.

The United States currently has a $45.7 billion trade deficit with India.

India  now joins a growing list of countries facing higher tariffs under Trump's "Liberation Day" trade policy, aimed at reshaping US trade relations by demanding greater reciprocity.

The White House had previously warned India about its high average applied tariffs - nearly 39% on agricultural products, with rates climbing to 45% on vegetable oils and around 50% on apples and corn. The setback comes despite earlier commitments by Prime Minister Narendra Modi and Trump to conclude the first phase of a trade deal by autumn 2025 and expand bilateral trade to $500 billion by 2030, up from $191 billion in 2024.

President Donald Trump said Wednesday that he’ll impose a 25% tariff on goods from India, plus an additional import tax because of India’s purchasing of Russian oil.

The announcement comes after a slew of negotiated trade frameworks with the European Union, Japan, the Philippines and Indonesia — all of which Trump said would open markets for American goods while enabling the US to raise tax rates on imports.

The president views tariff revenues as a way to help offset the budget deficit increases tied to his recent income tax cuts and generate more domestic factory jobs.

While Trump has effectively wielded tariffs as a cudgel to reset the terms of trade, the economic impact is uncertain as most economists expect a slowdown in US growth and greater inflationary pressures as some of the costs of the taxes are passed along to domestic businesses and consumers.

Trump's approach of putting a 15% tariff on America's longstanding allies in the EU is also generating pushback - possibly causing European partners as well as Canada to seek alternatives to US leadership on the world stage.

Reuters / AP