‘Will Take Steps to Secure National Interest’: India as Trump Announces 25% Tariff, Plus 'Penalty', From August 1
New Delhi: United States President Donald Trump has announced on Wednesday (July 30) that a 25% tariff, plus a penalty, will be imposed on India starting August 1. The Union government has responded to it saying that it "will take all steps necessary to secure our national interest".
Trump made the announcement in a post on his social media platform Truth Social. He started by calling India "a friend" but went on to say that over the years, the US had done "relatively little business with them" because India's tariffs were "far too high, among the highest in the world".
"Remember, 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," he wrote.
He also criticised New Delhi for maintaining trade with Russia, and imposed an additional penalty over and above the tariff because of it.
"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! 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 stated.
In a subsequent post, he added, "WE HAVE A MASSIVE TRADE DEFICIT WITH INDIA!!!"
Trump has not yet clarified what the penalty is. When asked about it at a presser in the White House later on Wednesday, Trump did not specify a figure, saying that negotiations between India and the US are ongoing.
“Well, we're negotiating right now … We're talking to India now, we'll see what happens. It doesn't matter too much whether we have a deal or whether we charge them a certain tariff. But you'll know at the end of this week,” he told reporters.
He also revealed that part of the motivation behind the tariff was India's participation in the “anti-the United States” BRICS grouping, which he claimed represented an attack on the dollar. The president has previously threatened additional tariffs on the BRICS countries.
New Delhi and Washington D.C. have been deliberating on a trade deal for months while Trump has been pressing for greater access for American goods to the Indian market.
The announcement comes just a day after Trump, on his way back from Scotland, said that the India trade deal "has not been finalised", while also suggesting a high tariff of “20-25%”.
Notably, this also comes days after commerce ministry officials reportedly said that a US government delegation will visit India on August 25 to hold discussions on the bilateral trade agreement.
India responds
The Ministry of Commerce and Industry responded to Trump's announcement with a statement saying it is studying the implications of the tariffs.
"The Government has taken note of a statement by the US President on bilateral trade. The Government is studying its implications. India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective," the statement read.
"The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs [micro, small and medium enterprises]. The Government will take all steps necessary to secure our national interest, as has been the case with other trade agreements including the latest Comprehensive Economic and Trade Agreement with the UK," it added.
Effectively, with a 25% tariff imposed, Indian products will find it difficult to compete in the American market.
In April, the US president had imposed a 26% tariff on Indian goods as part of his ‘Liberation day tariffs’. However, Trump paused these tariffs later the same day pending the conclusion of trade deals with targeted countries.
While the 26% ‘Liberation day’ levy on India was lower than the 104% imposed on China, 49% on Cambodia or 46% on Vietnam, the 25% tariff Trump announced on Wednesday is higher than those he has imposed on other countries over recent weeks, such as Vietnam's 20%, Indonesia's 19% and Japan's 15%.
Opposition points to Modi's ‘silence’ amid Trump's ‘insults’
Responding to Wednesday's announcement, Congress MP Jairam Ramesh said that Prime Minister Narendra Modi's plan to ‘keep quiet’ on Trump's “insults” in exchange for receiving “special treatment” from the president had failed.
“All that taarif [praise] between him and Howdy Modi has meant little,” Ramesh said referring to a 2019 Houston, Texas rally in which Trump had hosted Modi during the former's first presidency, when the two leaders were perceived as enjoying warm relations.
He added to charge the prime minister with staying silent even as Trump repeatedly claimed to have mediated the Indo-Pakistani ceasefire in May and hosted Pakistan Army Field Marshal Asim Munir in Washington, as well as while the US gave “financial packages to Pakistan from the IMF and the World Bank”.
Communist Party of India general secretary D. Raja blamed Trump for “arm-twisting India’s foreign policy” and the Modi government for its “complicit silence”.
“Donald Trump has claimed at least 30 times that he “mediated” a ceasefire between India and Pakistan using trade as leverage. This is a blatant assertion of arm-twisting India’s foreign policy, yet the BJP remains silent,” Raja wrote on X.
He continued to say, “When the aggressor is rewarded with complicit silence, and the opposition is silenced for asking valid questions, this isn’t diplomacy but disgrace,” adding that Modi “must speak up” and India must ‘regain its political autonomy’.
Although Modi during his over 100-minute-long speech in the Lok Sabha on Tuesday during the debate on the Pahalgam terror attack and Operation Sindoor said the latter did not end due to pressure from the leader of a third country, he made no mention of Trump or his claims of mediation.
Trump was the first to announce the end of the four-day-long hostilities between India and Pakistan and has since repeatedly claimed to have mediated the ceasefire using trade access as leverage.
The prime minister has not publicly addressed Trump's claims, although the foreign secretary announced last month that Modi spoke with Trump over the phone and rejected the US president's version of events.
New tariff rate ‘unfortunate’: FICCI
Wednesday's announcement has got some Indian firms that import Russian crude seeking clarity from the Union government on where their purchases stand, as well as regarding oil that is due to arrive in India after August 1, Bloomberg reported citing sources.
Since the start of Russia's invasion of Ukraine in early 2022, India’s imports of Russian crude – which has faced sanctions from various Western countries – have grown manifold, now accounting for nearly 40% of India’s oil imports.
India is currently Russia’s second-largest oil buyer after China.
Sources cited by Bloomberg said that Indian refiners, although confident of their ability to source oil from elsewhere if asked to stop buying from Russia, acknowledged that doing so would come with a heftier import bill.
Union oil minister Hardeep Puri had meanwhile said earlier this month that New Delhi would “deal with it” if Russian supplies were disrupted by secondary sanctions.
Some industry bodies have expressed dissatisfaction with the 25% tariff announcement. The Federation of Indian Chambers of Commerce and Industry called the move “unfortunate” and likely to have “a clear bearing on our exports”.
Nonetheless, it hoped that “this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon,” the federation's president Harsha Vardhan Agarwal said in a statement.
Subhash Goyal, member of the Confederation of Indian Industry's expert committee on tourism, said that the announcement marked a “sad day” for Indian exports and that the country will have to “relook at certain Asian and European markets” in a bid to diversify.
“It is a sad day for Indian exports because India is doing exports worth over $100 billion, and the surplus is over $40 billion … It will slow down some of our exports, and there will be a ripple effect on our manufacturing … But it will also adversely affect the American consumers,” he told ANI.
During Modi's visit to Washington in February, the two sides had agreed to begin negotiations over a multi-sector bilateral trade deal and implement its first tranche by autumn this year.
New Delhi and Washington have been in talks since, in which the Modi government's resistance to opening up its dairy sector or allow certain agricultural imports from the US – politically sensitive matters in India – are reportedly one of the sticking points.
At any rate, Trump has claimed – most recently on Wednesday – that India is ‘willing to cut its tariffs very substantially’.
The US is India's largest trading partner.
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