Govt Of India Reacts To US' 25% Tariff Announcement, Says Will Take Decisions In National Interest

The Indian government has acknowledged US President Donald Trump's announcement of a 25% tariff on India. They are currently evaluating its implications. The statement highlighted ongoing negotiations for a fair bilateral trade agreement. The government prioritises the welfare of farmers, entrepreneurs, and MSMEs and will take necessary measures to protect national interests, similar to past agreements like the Comprehensive Economic and Trade Agreement with the UK.

"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 government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs. 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," the statement said.

Trump's announcement came shortly before a US trade delegation's planned visit to New Delhi on August 25 for further trade discussions. This move is seen as a strategic pressure tactic by Washington to secure favourable trade deals with key partners like Japan, the UK, and the EU. Trump's post on Truth Social criticised India's trade practices as among the most stringent globally.

India's Energy Ties with Russia

India's crude oil imports from Russia have surged since the Ukraine conflict began, rising from 0.2% to an estimated 35–40% of its energy portfolio. India is now the second-largest buyer of Russian oil after China. Trump argued that India's continued energy and military purchases from Russia send a negative message amid international calls for Russia to end hostilities in Ukraine.

Despite acknowledging India as a "friend," Trump noted limited US-India trade due to India's high tariffs and complex barriers. He mentioned that historically, business between the two nations has been minimal. In April, Trump announced a global tariff hike of 26% on select trading partners, including India, which was paused for 90 days and extended through August 1 for further talks.

Trade Talks Persist

Despite recent tensions, bilateral trade discussions will continue. A US delegation led by Assistant US Trade Representative Brendan Lynch will meet India's chief negotiator Rajesh Agrawal in New Delhi in late August. Earlier this year, both sides concluded their fifth round of talks in Washington.

The US has been India's largest trading partner between 2021 and 2025, accounting for 18% of Indian exports and 6.2% of its imports. In FY 2024-25, bilateral trade reached USD 186 billion, with India enjoying a surplus of USD 44.4 billion. India exported goods worth USD 86.5 billion and imported USD 45.3 billion while posting a services surplus of USD 3.2 billion.

Key Exports and Imports

In 2024, India's top exports to the US included drug formulations (USD 8.1 billion), telecom instruments (USD 6.5 billion), jewellery (USD 8.5 billion), petroleum products (USD 4.1 billion), auto components, and garments (USD 5.6 billion combined). Imports from the US comprised crude oil (USD 8.1 billion), coal (USD 3.4 billion), aerospace parts, electric machinery, and gold (USD 4 billion combined).

The scope of Trump's "penalty" remains unclear but appears separate from the proposed import tax increase to 25%. Currently, the US imposes tariffs ranging from 20% on Vietnam to up to 36% on Thailand.