India Meets the New World

US President Donald Trump hosts Prime Minister of India Narendra Modi

India Meets the New World

Deepak Razdan

Monday, 4 August, 2025

India is finally face to face with the New World. So far, there was much greeting and hope. There was a happy distance. Now, India is part of the New Tariffs World. There is no haze of suspense any more.

Thursday on, Indian products will have a 25 per cent import tariff, besides other levies, before entering the US soil.

President Trump announced the new tariff rate for India even as India and the US were engaged in talks for a new trade agreement.

India was included in a long list of nations on 31st July for which the new tariffs were announced. President Trump additionally made a post on India on X to convey India deserved no mercy because it bought oil from Russia and thereby financed Russia’s war against Ukraine.

In his latest comment on India, the US President said “India is not only buying massive amounts of Russian oil, they are then, for much of the oil purchased, selling it on the Open Market for big profits.”

He said: “They don’t care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially, raising the Tariff paid by India to the USA.”

India replied to the charge strongly on Monday night. “Like any major economy, India will take all necessary measures to safeguard its national interests and economic security,” India said.

The Ministry of External Affairs (MEA) said India was targeted by the United States and the European Union (EU) for importing oil from Russia after the commencement of the Ukraine conflict.

“In fact,” MEA clarified, “India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict. The United States at that time actively encouraged such imports by India for strengthening global energy markets stability.”

What was noteworthy, MEA said, was “India’s imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation.”

“However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion,” India said.

MEA gave revealing facts and said the European Union in 2024 had a bilateral trade of Euro 67.5 billion in goods with Russia. In addition, it had trade in services estimated at Euro 17.2 billion in 2023. This is significantly more than India’s total trade with Russia that year or subsequently.

The European imports of LNG in 2024, in fact, reached a record 16.5mn tonnes, surpassing the last record of 15.21mn tonnes in 2022. The Europe-Russia trade includes not just energy, but also fertilizers, mining products, chemicals, iron and steel and machinery and transport equipment.

“Where the United States is concerned, it continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilizers as well as chemicals,” MEA clarified pointing to US duplicity.

In this background, MEA said, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.

On 31st July, Commerce and Industry Minister Piyush Goyal made a suo motu statement in Parliament regarding the new US tariffs.

Mr Goyal said “The implications of the recent developments are being examined by the Government. The Ministry of Commerce and Industry is engaged with all stakeholders including exporters and industry for taking feedback of their assessment of the situation.”

“The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, workers, entrepreneurs, exporters, MSMEs and all sections of industry. We will take all necessary steps to secure and advance our national interest,” the Commerce Minister said.

Referring to President Trump’s original 2nd April, 2025 order, he said the US President had issued an Executive Order on reciprocal tariffs imposing additional duties ranging from 10 per cent to 50 per cent on imports from its trading partners. A baseline duty of 10 per cent was effective from 5th April, 2025.

The additional duty on India announced at that time was 26 per cent including baseline tariff of 10 per cent. Originally, the full country-specific additional duty was to be effective from 9th April, 2025, but was postponed initially for 90 days on 10th April, 2025 and further extended up to 1st August, 2025.

Referring to the India-US talks for a trade agreement, Mr Goyal said India and the US entered into negotiations for a fair, balanced and mutually beneficial bilateral trade agreement (BTA) in March, 2025, with a target to complete the first tranche of the agreement by fall of 2025.

The two sides finalized the detailed Terms of Reference (ToR) to enter into negotiations of the BTA on 29th March, 2025 during the first physical round of discussions held at New Delhi.

Thereafter, four physical rounds of negotiations took place between the two sides, in New Delhi and Washington DC, to work towards finalization of the BTA in accordance with the agreed Terms of Reference. In addition, there have been many virtual meetings between the two sides.

The Commerce Minister said in just over a decade, India has rapidly transformed from being one of the “Fragile 5” to the fastest growing major economy in the world. “We have risen from the 11th largest economy to one of the top five economies, driven by our reforms, hard work of our farmers, MSMEs and entrepreneurs,” he said.

“It is also widely expected that we will become the third largest economy in a few years. Today, international institutions and economists see India as the bright spot in the global economy. India is contributing to almost 16 per cent of global growth,” he said.

Mr Goyal said in the last decade, the Government has taken transformative measures to promote India as the manufacturing hub of the world, driven by the ‘Make in India initiative’.

India's young, skilled and talented workforce is driving innovation and competitiveness of Indian industry. “Our exports have steadily increased during the last 11 years,” he said.

In an increasingly protectionist world, India has done mutually beneficial trade agreements with UAE, UK, Australia and EFTA countries. “We are also committed to similar trade agreements with other countries. We are consistently working for the welfare of the farmers and Indian agriculture to promote prosperity and ensure food security,” he said.

The Commerce Minister said the Government is confident that India will continue its fast-paced journey of inclusive growth and sustainable development towards the goal of Viksit Bharat 2047. India is progressing towards self–reliance with self-confidence, he said.

In India’s first reaction, the Ministry of Commerce & Industry issued a statement on 30th July night which said the Government had taken note of a statement by the US President on bilateral trade. The Government was studying its implications.

The government said 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 said.

The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs.

Significantly, India said “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.”

Launching the trade war on India, President Trump said on 30th July, “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 said “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.”

On 1st August Mr Trump had added another post on India “I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the world. Likewise, Russia and the USA do almost no business together. Let’s us keep it that way.”

The US President expressed satisfaction on 31st July that his bold trade strategy had yielded historic agreements with major trading partners. The EU had agreed to purchase $750 billion in US energy and make new investments of $600 billion in the United States, all by 2028, while accepting a 15% tariff rate.

Japan had agreed to invest $550 billion in the United States to rebuild and expand core American industries, as well as to further open its own market to US exports, all while paying a baseline 15% tariff rate.

The US-UK trade deal included billions of dollars of increased market access for American exports. Additional trade deals with Indonesia, the Philippines, South Korea, Vietnam, and others will protect US industries, open foreign markets, and encourage foreign investment in American industries.

Canada however shared India’s experience with the US and expressed it was also unfairly targeted, although it had taken extensive measures against fentanyl movement to the US as per US President Trump’s demand.

In a statement on 1st August, Prime Minister Mark Carney said President Trump has announced that the US will increase its tariffs to 35% on those Canadian exports that are not covered under the Canada-United States-Mexico Agreement, or CUSMA.

The United States has justified its most recent trade action on the basis of the cross-border flow of fentanyl, despite the fact that Canada accounts for only 1% of US fentanyl imports and has been working intensively to further reduce these volumes, the Canadian PM said.

“While we will continue to negotiate with the United States on our trading relationship, the Canadian government is laser focused on what we can control: building Canada strong,” he said.

Suggesting to countries like India to look inwards during the current period of crisis, Mr Carney said “Canadians will be our own best customer, creating more well-paying careers at home, as we strengthen and diversify our trading partnerships throughout the world.”

He said “We can give ourselves more than any foreign government can ever take away by building with Canadian workers and by using Canadian resources to benefit all Canadians.”