Tariff Tempest: India Rebukes Trump’s ‘Unfair’ Oil Sanctions as Diplomatic Tensions Mount

Published: 07th August 2025 | The English Chronicle Desk

A growing rift between Washington and New Delhi has burst into the open after India condemned the Trump administration’s latest tariff hike, calling it “unfair, unjustified and unreasonable.” The sweeping move, which raises duties on select Indian exports to as high as 50 per cent, comes in retaliation for India’s continued import of Russian oil—prompting accusations of economic coercion and igniting fears over the future of U.S.-India relations.

The newly announced tariffs, scheduled to take effect 21 days from 7 August, target key Indian sectors including textiles, footwear, chemicals, jewellery, and seafood. While the three-week window technically allows time for negotiation, the punitive measures have already rattled Indian industry and sparked fierce political reaction.

India’s Ministry of External Affairs issued a strongly-worded statement late Wednesday, reiterating that its oil imports are guided solely by national interest and market dynamics. “It is extremely unfortunate that the U.S. should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest,” the statement read. The ministry added that India is prepared to take all necessary measures to protect its economic security and the welfare of its 1.4 billion citizens.

Indian Prime Minister Narendra Modi now faces mounting pressure from opposition leaders and segments of the public to respond robustly to the move, which many in New Delhi perceive as a breach of mutual respect and sovereign autonomy.

This latest confrontation marks a dramatic downturn in bilateral relations that have otherwise flourished in recent years—driven by strategic convergence in the Indo-Pacific, defence cooperation, and shared concerns over China. Yet, Mr Trump’s imposition of new tariffs appears to discount those diplomatic gains. In a heated CNBC interview, the U.S. president accused India of failing to be a “good trading partner” and threatened even steeper duties within 24 hours, saying, “They’re buying Russian oil. They’re fuelling the war machine.”

Indian exporters now fear the consequences will be both deep and long-lasting. Industry bodies have warned of a dramatic drop in U.S. orders. According to the Global Trade Research Initiative, the new tariffs could render Indian goods up to 35 per cent more expensive compared to competitors from Vietnam, Bangladesh and Japan—risking a 40 to 50 per cent plunge in Indian exports to the U.S.

Organic chemicals face an effective duty of 54 per cent, while high-value exports like woven apparel, carpets, and jewellery are set to be levied between 50 to 60 per cent. The Confederation of Indian Textile Industry described the move as a “severe blow” to a sector already struggling with global uncertainty and shrinking profit margins.

Analysts have noted the irony of the situation. The very Russian oil purchases that Washington now penalises were previously tacitly encouraged under a G7-led price cap mechanism, introduced in 2022 to blunt Moscow’s revenues while keeping global energy markets stable. At the time, India was not only permitted but actively supported in buying discounted Russian crude under the $60 per barrel cap. Mr Trump’s reversal of that position has only deepened the confusion and mistrust among policymakers in New Delhi.

The friction also threatens to unravel years of painstaking diplomatic progress. Just last year, India and the U.S. had reaffirmed their Comprehensive Global Strategic Partnership during high-level visits and military cooperation agreements. But many now warn that the latest tariff offensive could bring those advances to a halt.

Farwa Aamer, Director of South Asia Initiatives at the Asia Society, noted that “this will cast a shadow over the broader relationship and compromise other bilateral goals.” She emphasised the need for calm, behind-the-scenes diplomacy to ease tensions and protect critical areas of cooperation, particularly in defence and technology.

Ms Aamer also highlighted the geopolitical fallout, arguing that deteriorating U.S.-India ties would provide strategic openings for China. “If US-India ties get strained further, it only helps China maintain and expand its influence. It also makes a strong case for India to ensure that its own relations with China remain stable,” she said.

Meanwhile, President Trump’s rhetoric continues to escalate. In a post on his platform Truth Social, he declared: “BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” He has also hinted that China could be the next target, citing Beijing’s own oil trade with Russia. U.S. Treasury Secretary Scott Bessent recently warned China of potential tariffs if it fails to curb its Russian oil imports, raising the spectre of a broader global trade war.

For India, the current crisis is as much about principle as it is about economics. Officials in New Delhi are reportedly exploring a range of retaliatory options, though few expect a full-scale trade war. The overriding aim, according to diplomatic sources, is to engage the U.S. in quiet, constructive dialogue before the tariffs take effect later this month.

Until then, Indian exporters, policymakers, and strategic thinkers alike are bracing for what could become a defining moment in the post-Cold War era of U.S.-India relations—a moment that may either reinforce mutual respect or unravel decades of hard-earned progress.