Trump announces 25% tariffs plus penalty for buying energy and arms from Russia

In a major setback to Indian industry, the US announced that India will have to pay a tariff of 25% from August 1 and also an additional “penalty” for buying energy and arms from Russia.

Taking to the social media “Truth Social”, President Donald Trump said “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.”

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 are not good.

“India will therefore be paying a tariff of 25%, plus a penalty for the above, starting from August first,” he wrote.

This comes while formal trade negotiations between India and the US are going on for several weeks. India has swung into action immediately and sources said that a statement from the government is expected shortly.

This comes within a week of India and the UK sealing a mega trade deal that would help Indian exporters and enhance bilateral trade with the UK, the two countries last week sealed a Comprehensive Economic and Trade Agreement (CETA) that will give “Unprecedented Market Access” for Indian goods with zero-duty access on 99% of tariff lines, covering nearly 100% of the trade value.

In its initial response the industry has expressed disappointment over the tariffs announcement by the US saying this will hurt Indian exports in a major way. According to sources, India is paying a price for buying energy and arms from Russia.

It is pertinent to mention that India has bought crude oil from Moscow after it dropped prices – a bargain buy for a country with massive energy needs but a limited budget. India’s decision to buy oil from Russia did not go well with the West. It can be recalled that India’s External Affairs Minister S Jaishankar has repeatedly told critics the country’s purchase of oil is guided by market demand and not political strategy.

The President has announced that India will have to pay a penalty over and above the 25% tariff but the amount of penalty has not been specified.