India will pay 25 per cent tariffs to the United States from August 1, President Donald Trump announced on Truth Social on Wednesday, adding that despite being friends, India and US have done relatively little business.
Trump also said the U.S. would penalize India for buying Russian arms and energy, as part of a tariff package that would kick in on Friday, reported Wall Street Journal.
In a post on his Truth Social network, he said India was a friend of the U.S. but criticized high Indian tariffs and said it had "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!" Trump wrote."INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST."
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 jewellery, and petrochemicals.
The US currently has a $45.7 billion trade deficit with India.
The announcement comes after days of suspense over the tariff rate that the US President would impose on India. Earlier on Tuesday, Trump had hinted that he may hit India with a 20-25 per cent tariff rate. However, he added that nothing had been finalised.
Earlier this month, commerce ministry Piyush Goyal said that India does not enter into any trade agreement based on deadlines and will accept the proposed trade deal with the US only when it is finalised, properly concluded, and in the national interest.
US Trade Representative Jamieson Greer told CNBC on Monday that talks with India required more negotiations as Trump was more interested in good deals than quick deals.
India has shown "strong interest in opening portions of its market" though its trade policy had long focussed on protecting domestic interests, Greer said.
Analysts said, without a deal, Indian exports could face average US tariffs of around 26 per cent, higher than those faced by Vietnam, Indonesia, Japan or the European Union.
Last week, US Senator Lindsey Graham had warned that Trump would impose stern tariffs on countries that continue to purchase oil from Russia, name-dropping India, China and Brazil.
He said that these countries purchase about 80 per cent of cheap Russian oil which keeps Vladimir "Putin's war machine going". "President Trump is going to put a 100 per cent tariff on all those countries, punishing them for helping Putin," he added.
NATO chief Mark Rutte had also warned countries engaging in trade and business with Russia, warning of 100 per cent tariffs and more sanctions, focusing on India, China and Brazil as he called on three countries to halt trade.
