While the U.S. has levied an additional 25% tariffs on India by the end of August for continuing import of discounted Russian crude oil, economists weigh in if ignoring Trump’s calls is a wise move for India.
India Risks Up To $87 Billion In Exports Amid US Tariff Threat
The U.S., is India’s largest export destination. The Narendra Modi-led country exported goods worth about $86.5 billion to the U.S. in the year ended March 2025, while the savings from the discounted Russian crude totalled only $3.8 billion for the same period, according to a report by Economic Times.
Notably, before the Ukraine war, India’s oil imports were primarily from the Middle East, with Russia accounting for less than 0.2% of India’s total imports.
President Donald Trump has openly criticized India’s actions, accusing the country of “fuelling the war machine” and warning of punitive levies. However, Warren Patterson, head of commodities strategy at ING in Singapore, questioned India’s decision, asking, “Are you going to risk up to $87 billion worth of exports to the US in order to save a few billion from oil discounts?"
Meanwhile, Shilan Shah, deputy chief emerging markets economist at Capital Economics, told CNBC that the Trump tariffs are "large enough to have a material impact" on India’s GDP, as U.S. spending drives around 2% of India’s GDP.
Moreover, India also stands to face stiff competition from Vietnam, Indonesia and Bangladesh, which sell similar products in the U.S. markets but are at a lower tariff range as a result of recent trade deals with Trump.
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Modi Vows To Shield Farmers As US Doubles Tariffs
In response to the U.S. tariffs, Indian Prime Minister Narendra Modi has reaffirmed his commitment to protecting the livelihoods of farmers, fisherfolk and pastoralists, despite growing threats of steep tariffs by President Trump. Modi declared, "For us, the interest of our farmers is our top priority," adding that he would "never compromise" on their interests.
Economist Peter Schiff warned that Trump’s decision to double tariffs on Indian imports could “expose the U.S. consumer as a paper tiger,” predicting a dollar crash that would “impoverish Americans but enrich foreign consumers, particularly the BRICs.”
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