After months of escalating US tariffs targeting Indian exports over Russian oil purchases, the two nations have struck a new agreement to ease tensions, potentially reshaping their strategic and economic ties amid ongoing geopolitical tensions.
US President Donald Trump announced a new trade understanding with India on Monday, saying New Delhi had agreed to scale back purchases of discounted Russian crude and to boost energy imports from the United States and potentiall...
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y Venezuela. The statement follows months of escalating U.S. measures that culminated in steep duties on a broad swathe of Indian exports.
The tariff confrontation began in early 2025 under Washington’s “reciprocal tariff” approach, aimed at narrowing the U.S. trade deficit with major partners. U.S. officials argued that India’s continued purchases of discounted Russian oil undercut Western sanctions and indirectly financed Moscow’s military campaign in Ukraine, making energy sourcing the principal catalyst for punitive duties. According to reporting by Al Jazeera and other outlets, the Trump administration moved in August 2025 to double its levy on many Indian imports to 50%, after earlier rounds raised rates by 25 percent. The duties were announced with rapid effect and, in some accounts, were to apply within weeks; exceptions were granted for shipments already in transit.
New Delhi condemned the action. India’s Ministry of External Affairs called the measure “unfair, unjustified, and unreasonable,” rejecting the premise that its energy purchases warranted such treatment. Indian officials also noted that other countries continued to import Russian crude without facing comparable penalties, underscoring a dispute over the consistency of U.S. enforcement.
Economists and trade analysts warned the tariffs risked significant disruption. Reporting in Al Jazeera and The Guardian emphasised the potential for serious knock-on effects to Indian exporters and global supply chains, with observers highlighting vulnerable sectors such as textiles, gems and jewellery, and seafood. The Times of India noted certain carve-outs for products including pharmaceuticals and some energy-related goods, but said the overall move placed India alongside Brazil as the only countries subject to the highest U.S. tariff rate.
The financial scale of the measures drew particular attention. Al Jazeera cited Indian estimates that more than $48 billion of exports could be affected, a figure that underscores the stakes for an economy heavily linked to the American market. LiveMint and other outlets also reported the U.S. had earlier imposed 25 percent levies before escalating them to a combined 50 percent, and that the policy had been framed as a tool to pressure India to alter its oil procurement.
Despite the rancour, diplomatic and commercial channels continued to operate. The Associated Press reported ongoing U.S.-India efforts to shore up economic and strategic ties, including the nomination of Sergio Gor as U.S. ambassador to India and discussions of a bilateral trade agreement that have been slowed by differences over energy sourcing and domestic political considerations in New Delhi. The White House characterised the recent announcement as part of a wider deal, saying India would increase purchases of U.S. energy; U.S. officials have framed that outcome as a de-escalation conditional on New Delhi’s energy commitments.
Accounts vary over timing and implementation. Some reports said the 50 percent rate took immediate effect and would deeply affect supply chains, while other coverage described transitional arrangements for cargoes already en route to the United States. The discrepancy highlights how rapidly evolving policy announcements can create uncertainty for exporters and importers alike.
The episode reflects a broader shift in U.S. trade policy in 2025 toward more aggressive use of tariffs as leverage on geopolitical and trade grievances. For India, the immediate task is to navigate the commercial fallout while balancing strategic considerations over its energy needs. For Washington, the measures illustrate a willingness to deploy trade tools to enforce foreign policy objectives, even at the risk of straining ties with a key partner.
Source: Noah Wire Services
