Donald Trump announces 25 pc tariffs with penalty on India from Aug 1
The announcement was made on Truth Social, his own social media platform. Trump said the decision also comes with a penalty on India for buying military equipment and energy from Russia.
He claimed that India's tariffs are among the highest in the world and that the country also has "the most strenuous and obnoxious non-monetary trade barriers" compared to any other nation.
"Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high," Trump said.
He also mentioned that the US has a massive trade deficit with India.
The announcement follows months of talks between the two countries, but a mini or interim trade deal has remained out of reach.
The US President also criticised India's continued purchases of Russian weapons and energy, especially during the ongoing war in Ukraine.
He said India has always bought the majority of its military supplies from Russia and is one of the largest buyers of Russian energy, along with China.
"At a time when everyone wants Russia to stop the killing in Ukraine, these things are not good," Trump added.
"ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!" he wrote.
Last week, Finance Minister Nirmala Sitharaman said trade talks with the US are progressing well. Her comment came ahead of Trump's country-specific tariffs scheduled to take effect from August 1.
India last signed a free trade agreement (FTA) with the UK. Commerce and Industry Minister Piyush Goyal hailed the India-UK free FTA called it as a 'game-changing' deal that provides immense opportunities and benefits to farmers, businessmen, MSME sectors, young professionals and fishermen.
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Kpler data shows a notable decline in India's Russian crude imports in July (1.8 million bpd versus 2.1 million bpd in June), aligning with seasonal refinery maintenance and weaker monsoon-driven demand. However, the drop is more pronounced among state-run refiners, likely reflecting heightened compliance sensitivity amid mounting geopolitical risk. Private refiners, who account for over 50 per cent of Russian crude intake, have also begun reducing exposure, with fresh procurement diversification underway this week as concerns over US sanctions intensify. Mr. Ritolia said replacing Russian crude isn't plug-and-play. The Middle East is the logical fallback, but has constraints - contractual lock-in, pricing rigidity, and a mismatch in crude quality that affects product yield and refinery configuration. "The risk here is not just supply but profitability. Refiners will face higher feedstock costs, and in the case of complex units optimized for (Russian) Urals-like blends, even margins will be under pressure," he said. In the future course, Kpler believes India's complex private refiners — backed by robust trading arms and flexible configurations — are expected to pivot toward non-Russian barrels from the Middle East, West Africa, Latin America, or even the U.S., where economics permits. This shift, while operationally feasible, will be gradual and strategically aligned with evolving regulatory frameworks, contract structures, and margin dynamics. However, replacing Russian barrels in full is no easy feat — logistically daunting, economically painful, and geopolitically fraught. Supply substitution may be feasible on paper, but remains fraught in practice. "Financially, the implications are massive. Assuming a $5 per barrel discount lost across 1.8 million bpd, India could see its import bill swell by $9–11 billion annually. If global flat prices rise further due to reduced Russian availability, the cost could be higher," it said. This would increase fiscal strain, particularly if the government steps in to stabilize retail fuel prices. The cascading impact on inflation, currency, and monetary policy would be difficult to ignore.
