India Faces 25% More US Tariff for Russia Ties; GTRI Suggests Wait-and-Watch Approach 

The United States today announced an additional 25% tariff on all Indian imports, on top of an existing 25% duty, taking the total to 50% from August 27.  The White House said the measure responds to India’s continued purchase of Russian oil.

The move places India among the most heavily taxed US trading partners, far above rivals such as China, Vietnam, and Bangladesh, and threatens most of India’s $86.5 billion in annual exports to the US, from textiles to machinery.

Terming the US action as hypocritical, thinktank Global Trade Research Initiative point out that in 2024, China bought $62.6 billion of Russian oil, more than India’s $52.7 billion, yet faces no such penalties. 

Washington avoids targeting Beijing because of China’s leverage over critical materials such as gallium, germanium, rare earths, and graphite, vital for US defence and technology, said trade export Ajay Srivastava, founder of GTRI. 

The US has also overlooked its allies’ trade with Russia: the EU imported $39.1 billion of Russian goods last year, including $25.2 billion in oil, while the U.S. itself purchased $3.3 billion in strategic materials from Russia, it said.

The tariffs are expected to make Indian goods far costlier in the US, with potential to cut US-bound exports by 40–50%.

India could think of not buying Russian oil if economically viable, but should not abandon Russian oil purchases simply to satisfy Washington, said GTRI, adding that the US may find new pretext to tax India again.

India should remain calm, avoid retaliation for at least six months, and recognise that meaningful trade negotiations with the US cannot proceed under threats or mistrust. 

US action will push India to reconsider its strategic alignment, deepening ties with Russia, China, and many other countries.

India’s exports to the US were at $86.5 billion in 2024-25

Earlier, the US had imposed a 25% country-specific tariff on India. In contrast, regional rivals like Vietnam, Bangladesh, and Mexico continue to enjoy lower or zero tariffs. The new US tariff regime exempts only a few sectors, pharmaceuticals, energy products, critical minerals, and semiconductors. Outside these, nearly every major Indian export faces pressure. 

Finding other export markets to offset US losses won’t be easy. Global trade is shifting away from openness, with more countries adopting restrictive policies tied to security, politics and climate. GTRI had said in its earlier note.

The European Union, India’s second-largest trading partner with imports of $75.7 billion, is introducing a carbon border tax in January 2026. Indian steel and aluminium are already less competitive due to new documentation rules, contributing to a 24.4% drop in EU-bound exports this year.

More challenges are coming. The EU’s deforestation law will impose new taxes on farm goods, potentially hitting a wide range of Indian agricultural and industrial exports.

GTRI had proposed a five-point plan to stabilise and future-proof Indian exports:
1.    Revive the Interest Equalisation Scheme
2.    Build a Real-Time Export Helpdesk
3.    Use FTAs Strategically—but Manage Expectations
4.    Reimagine Tourism as a Strategic Export Sector
5.    Onboard New Exporters with a Unified Trade Network