Trump to impose 25% tariff on Indian goods from Aug. 1

President Donald Trump announced on Wednesday that he will impose a 25% tariff on goods from India, along with an additional import tax due to India's purchase of Russian oil. Trump mentioned on his Truth Social platform that India is a friend but has high tariffs on U.S. goods. He pointed out that India's procurement of military equipment and oil from Russia has contributed to the conflict in Ukraine. Consequently, he plans to levy an extra 'penalty' starting Friday as part of the revised tariffs on multiple countries.

The recent announcement follows trade negotiations with the European Union, Japan, the Philippines, and Indonesia. Trump believes these agreements will enhance market access for American products while allowing the U.S. to increase import duties. He sees tariff revenues as a means to counterbalance the budget deficit resulting from recent tax cuts and create more domestic manufacturing jobs.

Although tariffs have been a tool for Trump to reshape trade terms, the economic repercussions remain uncertain. Most economists anticipate a slowdown in U.S. growth and higher inflation as the tax costs are transferred to domestic businesses and consumers. Last year, the U.S. had a $45.8 billion trade deficit in goods with India, importing more than exporting.

With a population exceeding 1.4 billion, India is the world's largest country and a potential geopolitical counterweight to China. India maintains strong ties with Russia and has not backed Western sanctions against Moscow for its actions in Ukraine. During a meeting with Indian Prime Minister Narendra Modi in February, Trump mentioned that India would begin purchasing American oil and natural gas.

Trump discussed his trade and tariff policies with reporters on his return flight from Scotland. When asked about reports of a 25% tariff rate on India, he stated that the situation was still evolving. He also noted that a trade agreement with India had not been finalized yet.