While this step is unlikely, in and of itself, to impact the Indo-U.S. This action greatly escalates tensions between Washington and New Delhi. In part, this action is retaliatory since India continues to import Russian oil. As expected, Trump has publicly decried this move. The executive order, signed by Trump, sets the new tariff to take effect in three weeks, further complicating trade negotiations that have yet to yield a significant deal between the two nations.
Relations between Trump and Indian Prime Minister Narendra Modi have soured in recent weeks, driven by differing approaches to energy security and geopolitical alliances. The new tariff is on top of a 25 percent tariff already scheduled to take effect in the coming weeks. Overall, the average tariff rate on Indian products skyrockets to 50 percent. This incendiary step is a major new low in an already extremely frayed diplomatic relationship.
The Context of Tariff Imposition
India’s increasing purchases of Russian oil have alarmed U.S. officials. Trump’s administration has been quite tough on Russia, especially with their current war in Ukraine. In fact, the U.S. President has suggested he might introduce additional tariffs on Russia. He emphasized the conditional nature of these actions; much will depend on how Russian President Vladimir Putin continues to escalate the conflict.
To meet this new demand, especially as a direct consequence of the war on Ukraine, India has sharply ramped up its imports of Russian oil. The Indian government stated, “began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict.” This move is intended to ensure expanding energy provision in a country of 1.4 billion people.
India’s Response to Rising Tariffs
Considering the substantial economic ramifications of the new tariffs, India has so far offered no public statements on the new levy. Earlier this year, the Indian government registered its displeasure at the United States’ move to impose new tariffs. They described it as “extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are taking in their own national interest.”
New Delhi is right to be cautious. That lack of official commentary serves to highlight its very deliberate avoidance of the geopolitical minefield that is international relations, particularly as tensions rise with the United States.
Implications for Future Trade Relations
Those new tariffs may be destined to further inflame the recent dialogue between the U.S. and China on working toward a more complete trade pact. As domestic constituencies on both sides push hard and international allies weigh in, getting to common ground will get harder and harder. The imposition of tariffs impacts trade and signals a shift in diplomatic relations that could affect broader geopolitical dynamics.
