A new trade standoff is brewing between the United States of America and India after US President Donald Trump threatened to significantly raise tariffs on Indian goods citing continued import of Russian oil as a key concern.
In a television interview on Tuesday, President Trump said he plans to hike the current 25 per cent tariff on Indian imports "very substantially" within the next 24 hours. The move comes shortly after India issued a strong rebuttal to tariff measures announced by the Trump administration.
"India has not been a good trading partner," Trump said. "They do a lot of business with us, but we don't do business with them. So we settled on 25 per cent, but I think I'm going to raise that very substantially... because they're buying Russian oil. They're fueling the war machine." India's Ministry of External Affairs (MEA) swiftly responded on Monday, August 4 condemning Trump's remarks as "unjustified and unreasonable."
In a strongly worded statement by the MEA defended India's energy policy, stating that imports from Russia were driven by necessity, not ideology.
"India has been targeted by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict," the statement read. "In fact, India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict. The United States at that time actively encouraged such imports by India for strengthening global energy markets stability."
Analysts say Trump's escalating rhetoric could signal a renewed trade war between the world's largest and fastest-growing major economies, straining an already complicated geopolitical equation shaped by energy security, defense partnerships and regional rivalries.
So far, the White House has not issued an official directive or timeline for the proposed tariff hike. However, Trump's comments have rattled markets and raised concerns among exporters on both sides.
India is expected to hold high-level consultations with trade and foreign policy officials this week to evaluate possible countermeasures, should the tariffs materialize.
This is not the first time the Trump administration has taken a tough stance against India on trade. During his first term, President Trump withdrew India from the Generalised System of Preferences (GSP), a preferential trade program that allowed duty-free exports of certain goods to the U.S.
As tensions rise, global observers will be closely watching whether diplomatic backchannels can de-escalate the situation - or whether a tit-for-tat trade war is inevitable.