The situation in trade relations between India and the US has undergone significant changes over the past eighteen months. In February 2025, the American tariff was set at 10%. However, the US parliament has now approved a bill that allows President Donald Trump to impose a tariff of up to 100% on countries purchasing oil and gas from Russia. There is a risk that India could fall under this restriction.
In February 2025, Trump stated that the US would determine its tariffs based on the tariffs imposed by other countries on American goods. During this period, India and the US began working on a limited trade agreement, aiming to increase mutual trade turnover to $500 billion by 2030.
In April 2025, the US announced the introduction of a 26% tariff on Indian goods. Nevertheless, this tariff was subsequently suspended for 90 days, during which time a 10% tariff applied to Indian products.
In July 2025, the US raised the tariff on Indian goods to 25%, and in August, increased it by another 25%, bringing the total tariff level to 50%. The reason for US dissatisfaction was India's purchase of oil from Russia. India protested, stating that it has the right to make decisions based on its national interests and energy needs for its population of 1.4 billion people.
In February 2026, tensions between the two countries eased somewhat. The US decided to lower the tariff on Indian goods to 18%. This was linked to reaching an agreement on reducing purchases of Russian oil and eliminating some trade barriers. The parties also published the framework for the trade agreement.
However, this relief was short-lived. After the expiration of a 150-day period in July, the US reintroduced a 10% tariff on India, citing that goods from India are produced through forced labor.
In September, the US House of Representatives approved a bill aimed at increasing pressure on Russia and Iran. This law grants Trump the authority to impose a tariff of up to 100% on countries that buy oil and gas from Russia. The goal of this step is to put pressure on Russia's revenue from energy sales. For India, this is a serious issue since the country imports oil from Russia. India warned the US that such actions could negatively affect bilateral relations. The mechanism for implementing this provision and its impact on trade between India and the US remains an open question.
