India had "This" to say about the 25% US tariff: “Unjustified and Unreasonable”.
- Remin Francis I R
- Aug 5
- 3 min read
The global stage just got a little hotter, and no, we’re not talking about climate change. We’re talking about tariffs, oil, and geopolitics. At the centre of this storm? India, the US, and Russia.
Let’s break it down.
The Spark: What Triggered the US Threat?
It all began with a sharp accusation from former US President Donald Trump. On August 4th 2025, in a fiery post on Truth Social, Trump lashed out at India, threatening to “substantially” increase tariffs, possibly up to 25% on Indian exports.
Why? According to Trump, India has been buying “massive amounts” of discounted Russian crude oil and allegedly reselling it on the global market for a profit. He framed this as morally irresponsible, especially during the ongoing war in Ukraine, accusing India of turning a blind eye to the "people being killed by the Russian War Machine."
Emotionally charged and strategically pointed, the tariff threat is a clear signal: the US is unhappy with India’s balancing act between energy needs and global diplomacy.
India Hits Back: Calm, Clear, and Firm
India, however, didn’t take the accusations lightly.
In a strongly worded statement, the Ministry of External Affairs (MEA) called the US threats “unjustified and unreasonable.” And they didn’t stop there. India laid out its side of the story, point by point.
So, why is India buying Russian oil?
It’s a necessity, not a choice. With global oil markets in flux, India needs affordable and predictable energy to fuel its growing economy and keep inflation in check.
A shift in supply chains. As Europe cut down Russian imports post-Ukraine invasion, Russia turned to other buyers, including India. This was a market realignment, not a political statement.
Irony alert! The MEA reminded the US that it had previously encouraged India to buy Russian oil to help stabilise global energy prices.
And the hypocrisy?
India wasn’t shy about calling out the West’s double standards.
The European Union did over €67.5 billion in goods trade with Russia in 2024 and imported a record 16.5 million tonnes of LNG.
It also had €17.2 billion in services trade with Russia in 2023, covering more than just energy, fertilisers, mining products, chemicals, iron, steel, and machinery.
The US itself continues to import uranium hexafluoride (critical for its nuclear industry), palladium (used in EVs), along with fertilisers and chemicals.
What Does This Mean for the Indian Economy?
The threat of tariffs, especially a hefty 25%, is no small matter.
The Bad News (From Moody’s and Goldman Sachs):
India’s manufacturing sector could take a direct hit.
The move could hurt India’s competitiveness compared to other Asia-Pacific exporters.
Goldman Sachs estimates a 0.1 percentage point GDP growth hit in 2025, and 0.2pp in 2026, not catastrophic, but significant.
The Good News:
Services to the rescue. Moody’s points out that India’s services sector remains strong, continuing to be a key driver of growth.
Domestic demand is a cushion. Unlike many export-driven economies in the region, India isn’t overly dependent on foreign trade. Its massive internal consumption acts as a vital economic buffer.
Room for negotiation. Analysts believe this isn’t a done deal yet. India’s purchase of US crude oil may give it leverage in upcoming trade talks.
India’s Game Plan: Supporting Exporters and Negotiating Terms
Rather than react impulsively, India is planning a multi-pronged strategy to deal with the fallout. The government is considering targeted aid for exporters likely to be hit hardest. These include:
Engineering goods
Agriculture products
Seafood and marine
Leather and textiles
Basmati rice and handcrafted jewellery
Tools on the table include:
Enhanced payouts under RoDTEP (Remission of Duties and Taxes on Export Products) and RoSCTL (Rebate of State and Central Taxes and Levies) schemes
Financial relief via schemes like the Interest Equalisation Scheme (IES)
India is continuing discussions with the US on a Bilateral Trade Agreement (BTA), with the next round of physical talks scheduled from August 25 to 30. The hope? To smooth tensions and find common ground before any tariff is enforced.
Conclusion: A High-Stakes Global Chess Game
This isn't just about oil or tariffs, it’s about power, alliances, and India’s place in the global order.
The US is using economic tools to steer India’s foreign policy. But India is standing firm, asserting its “strategic autonomy”, making it clear that its decisions are driven by national interest, not foreign pressure.
And while the situation is still unfolding, one thing is clear: how India navigates this moment could define its economic and diplomatic future for years to come.
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