Trump punishes India with heavy 50% tariffs for buying Russian oil

Washington, D.C., Aug 26 – President Donald Trump has imposed a sweeping 50% tariff on most goods imported from India, citing New Delhi’s continued purchases of discounted Russian oil. The decision, which took effect just after midnight on Wednesday, marks one of the toughest trade measures against a key U.S. ally and has already triggered concerns of significant turmoil across global trade flows.

The tariffs, first introduced at 25% earlier this month, were doubled after Trump accused India of indirectly financing Russia’s war in Ukraine by relying on Moscow’s oil supplies. “It doesn’t matter to me how India chooses to deal with Russia. They can take their dead economies down together, for all I care,” Trump declared on his social platform, Truth Social, weeks before the policy was announced.

Heavy Blow to Indian Exporters

India, whose shipments to the United States totaled $87.3 billion last year, now faces some of the steepest duties imposed by Washington. The new tariffs cover most goods, though certain key products such as smartphones are temporarily exempt. For industries like textiles, gems and jewelry, and seafood, which have long relied on the American market, the cost of doing business has suddenly skyrocketed.

Industry reports indicate that several export units in key textile hubs, including Tirupur, Delhi, and Surat, have begun shutting down production lines as mounting tariffs erode their ability to compete internationally. “Indian goods have been rendered uncompetitive compared to competitors from China, Vietnam, and other Southeast Asian nations,” said FIEO president SC Ralhan.

Santanu Sengupta, chief India economist at Goldman Sachs, cautioned that if such high tariffs persist, the country’s GDP growth could slip under 6%, down from the earlier projection of about 6.5%. Rival exporters from Turkey to Thailand are already benefiting as U.S. buyers shift to cheaper alternatives.

Defiant Response from New Delhi

Despite the pressure, India has made it clear it will not halt its energy imports from Russia. Prime Minister Narendra Modi, addressing the nation on Tuesday, urged citizens to embrace domestic products. “Everyone should embrace the principle of purchasing exclusively ‘Made in India’ products,” he stated. “Pressure on us may increase, but we will bear it.”

External Affairs Minister S. Jaishankar dismissed Washington’s demands as “unjustified and unreasonable,” noting that Europe continues to trade extensively with Russia. According to Indian officials, nearly 42% of the country’s oil imports would need to be replaced if it gave in to U.S. demands, an impractical expectation for a nation heavily dependent on energy.

A Risk to Strategic Ties

The tariffs have also shaken the broader strategic relationship between Washington and New Delhi. For years, the two countries had worked to strengthen their defense and economic cooperation, even while navigating deep-seated mistrust. Now, many fear that trust is collapsing.

“Trump has blown it,” said a senior Indian trade official who requested anonymity. “Years of effort between the two nations, which overcame deep-rooted mistrust to establish a strong strategic partnership, are now in jeopardy. It will take a long time to reboot, and probably not until Trump is out.”

Still, Jaishankar emphasized that dialogue remains open. “We are two big countries, we need to have conversations. The lines are not cut,” he said, confirming that trade talks continue despite the growing rift.

Indian Markets React

The financial fallout was immediate. On Tuesday, ahead of the tariffs taking effect, India’s benchmark BSE Sensex fell 849 points, or about 1%, to close at 80,876. Investors fear prolonged tariffs could severely impact sectors heavily dependent on U.S. buyers.

Around 30% of India’s shipments to the U.S—covering items like pharmaceuticals, electronics, raw drug ingredients, and refined petroleum—continue to be exempt from tariffs. But analysts warn that for labor-intensive sectors like apparel and jewelry, the new duties could cause widespread job losses and closures.

Trump’s Contradictions

Trump’s decision has also drawn criticism for its inconsistency. While he has repeatedly accused India of bankrolling Russia’s war effort, he has not taken similar measures against China, which continues to import significant volumes of Russian crude.

In a twist that appears contradictory, Trump has recently taken steps to warm relations with Moscow. Earlier this month, he invited Russian President Vladimir Putin to Alaska for a summit and even suggested a trilateral meeting with Ukrainian President Volodymyr Zelenskyy to discuss ending the war.

India Tilts Toward Moscow and Beijing

As relations with Washington sour, India appears to be pivoting more toward Moscow and cautiously reopening channels with Beijing. Jaishankar recently visited Russia, where he met with President Putin. Modi, meanwhile, is scheduled to travel to China for the first time in seven years to attend the Shanghai Cooperation Organisation summit.

“India may cautiously move closer to China, though it will stop short of a complete alignment,” remarked another senior Indian official. “There is still mistrust because of past clashes, but the reality is that India must do business with China.”

Analysts See a Strategic Misstep

Veteran South Asia analyst Michael Kugelman described Trump’s tariffs as a major miscalculation. “The current administration may set a record for the highest number of own goals with a top bilateral partner over such a short period of time,” he said.

For India, the immediate priority is damage control. For the U.S., the question is whether the tariffs will weaken Russia’s oil revenues or simply push New Delhi further into the arms of America’s rivals.