Jai Siya Ram
đź“Ś What Just Happened
On August 6, 2025, U.S. President Donald Trump signed an executive order that imposes another 25% tariff on imports from India, citing the country’s continued oil trade with Russia. This follows his earlier announcement of a 25% tariff, effectively doubling punitive duties on Indian goods.
This is part of Trump’s broader strategy: tying trade actions to geopolitical concerns, particularly regarding oil and defense ties with Russia.
⚠️ Why This Matters
- Geopolitical Linkage: Trump criticized India for allegedly profiting by importing Russian oil and reselling it, claiming this supports Russia’s war machine in Ukraine.
- Trade Deal Breakdown: Despite India offering zero tariffs on U.S. industrial goods, Trump dismissed this and demanded broader market access and strategic alignment.
- India Stands Firm: Officials argue India imports Russian oil based on national interest and global supply stability—and have denounced the U.S. targeting as hypocritical.
📉 Economic Impact & Trade Exposure
- Exports at Stake: India’s exports to the U.S. in fiscal year 2024–25 were worth approximately $80–81 billion, spanning sectors like apparel, pharmaceuticals, gems, and machinery.
- Tariff Burden: A combined 35% effective duty (25% tariff + 10% penalty) could hit nearly 80% of exports to the U.S., significantly eroding competitiveness.
- Sectoral Stress: Labour-intensive industries—garments, jewelry, agriculture-linked goods—are especially vulnerable.
- Growth Buffer: Despite the shock, India’s GDP growth for FY26 was held steady at 6.5% by RBI, which expects only moderate impact due to strong domestic demand.
âś… Summary
- Trump’s executive decision raises tariffs to 50% in effect for India — combining the initial 25% and newly imposed 25%.
- This escalation underscores heightened trade friction, driven by India’s independent energy choices.
- While India maintains fiscal resilience, the pressure may accelerate negotiations or trigger alternative trade arrangements.
