US Slaps 25% Tariff on Indian Goods from August 1; Six Indian Companies Sanctioned Too 

Washington/New Delhi, July 31, 2025 – In a move that could significantly escalate trade tensions, US President Donald Trump has announced a 25% tariff on all goods imported from India starting August 1, along with an unspecified penalty targeting India’s purchases of Russian crude oil and military equipment. This abrupt declaration comes barely a day after Indian officials stated that a US trade delegation was scheduled to visit New Delhi on August 25 for continued bilateral negotiations.

The announcement was made via Trump’s Truth Social platform nearly 12 hours after he had earlier hinted at a 20–25% tariff on India, describing the country as a “friend” but also accusing it of unfair trade practices.

In a parallel action aimed at Iran’s petroleum trade, the US government also announced sanctions on 13 international entities on July 30, including at least 6 Indian companies, for dealing in Iranian-origin petrochemicals.

Trump’s Statement and Justification

Taking to social media, Trump criticised India’s trade practices as “most strenuous and obnoxious,” calling out the high tariffs and non-monetary barriers imposed on American products.

“All things not good! India will therefore be paying a tariff of 25%, plus a penalty for the above, starting on August first,” he wrote.

The US President argued that, despite India being a friend, bilateral trade volumes have remained low due to high Indian tariffs and restrictive trade policies. He further accused India of enabling Russia’s global trade by purchasing energy and military supplies at a time when the West is seeking to isolate Moscow. He further claimed that the United States has a “massive trade deficit” with India, currently amounting to $45.7 billion.

Sanctioned Indian companies include:

• Kanchan Polymers, which imported over $1.3 million worth of Iranian polyethylene from Tanais Trading.
• Alchemical Solutions, which traded over $84 million worth of Iranian petrochemicals between January and December 2024.
• Ramniklal S Gosalia and Company, with imports worth $22 million, including methanol and toluene.
• Jupiter Dye Chem, linked to $49 million in Iranian-origin petrochemical imports like toluene.
• Global Industrial Chemicals, which imported methanol and other Iranian products valued at $51 million.
• Persistent Petrochem, which shipped approximately $14 million worth of Iranian-origin methanol from companies including Bab Al Barsha.

These designations mean all property and interests in property held by these entities in the US or by US persons are blocked. They must be reported to the Department of Treasury’s Office of Foreign Assets Control (OFAC). Any entity owned 50% or more by these designated persons is also blocked.

The restrictions also prohibit all transactions by US persons or within the US involving these entities unless specifically authorised by OFAC. This includes contributing or receiving funds, goods, or services to or from any blocked person.

However, the US noted that its objective is not to punish but to encourage behavioural change. Companies can seek removal from the sanctions list by several suggested methods.

Russia Link Sparks Penalty

India’s imports of Russian crude oil surged to 35–40% of total oil purchases after the Ukraine war, up from just 0.2% before the conflict began. This makes India the second-largest buyer of Russian oil after China. Trump highlighted this as a key reason behind the penalty, marking India as the first country to face such consequences for dealing with Russia.

Trade Deal Uncertain as Talks Loom

India’s Ministry of Commerce responded cautiously, saying it is examining the implications of the announced measures.

“We remain committed to concluding a fair, balanced and mutually beneficial bilateral trade agreement,” the ministry stated.

Negotiations for the agreement are ongoing, with the sixth round scheduled for August 25 in New Delhi. The last round was held in Washington between India’s Special Secretary Rajesh Agrawal and Assistant USTR Brendan Lynch.

Rupee Takes a Hit

Reacting to the announcement, the Indian rupee saw its steepest single-day fall in over three years, plunging by 89 paise to settle at a record low of 87.80 per dollar.

Potential Economic Fallout

Indian exporters and industry leaders expressed disappointment, warning of negative repercussions for the country’s outbound trade and global supply chain position. The uncertainty is compounded by the lack of clarity on whether the new 25% tariff is in addition to the existing 10% baseline duty announced earlier this year.

Also, the quantum of the penalty for Russian imports remains unspecified, raising further concerns.

India–US Trade Snapshot (FY24–25)

• Total bilateral trade: USD 186 billion
• Goods exports from India to US: USD 86.5 billion
• Goods imports from US: USD 45.3 billion
• Trade surplus in goods: USD 41 billion
• Services exports: USD 28.7 billion
• Services imports: USD 25.5 billion
• Overall trade surplus: USD 44.4 billion

Major Indian Exports to US (2024)

• Drug formulations & biologicals: USD 8.1 billion
• Telecom instruments: USD 6.5 billion
• Precious stones: USD 5.3 billion
• Petroleum products: USD 4.1 billion
• Auto components: USD 2.8 billion
• Cotton garments: USD 2.8 billion

Major US Exports to India (2024)

• Crude oil: USD 4.5 billion
• Petroleum products: USD 3.6 billion
• Coal and coke: USD 3.4 billion
• Polished diamonds: USD 2.6 billion
• Aircraft and parts: USD 1.3 billion
• Gold: USD 1.3 billion

Competitive Tariff Landscape

The US has levied:

• 20% on Vietnamese goods
• 25% on Malaysian goods
• 35% on Bangladeshi goods
• 36% on Thai goods

India’s new 25% rate aligns it with Malaysia but remains lower than some other regional peers.

Tariff History and Suspensions

On April 2, Trump announced reciprocal tariffs of up to 26% on Indian goods, with a baseline 10% duty, which was suspended for 90 days, extended until August 1. The newly announced 25% duty is in addition to existing sector-specific tariffs like 50% on steel and aluminium. It comes with 25% on autos. As the clock ticks toward August 1, all eyes are on whether last-minute negotiations can ease trade tensions or whether this will escalate into a full-blown tariff war.

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