The US has imposed an additional 25% tariff on Indian imports in retaliation for New Delhi’s continued purchases of Russian oil, escalating tensions between the two countries and putting pressure on India’s trade and investment ties with Washington.

The decision, announced via an executive order from President Donald Trump on Wednesday, adds a second round of duties to Indian goods already subject to 25% tariffs. The White House said the move was necessary given India’s growing reliance on Russian crude, which the US claims is helping to fund Moscow’s war in Ukraine.

India’s foreign ministry hit back, describing the tariffs as “unfair, unjustified and unreasonable.” Officials defended India’s oil imports as a matter of national energy security for its 1.4 billion people, especially given that several other countries continue similar trade with Russia.

The additional tariffs, which take effect on August 27, will bring the total levy on affected Indian exports to 50%. This sharp escalation comes at a sensitive time, as the two countries were nearing a limited trade deal before negotiations collapsed. Trump’s administration has also recently mocked India’s economy and strengthened rhetoric against New Delhi’s ties with Moscow.

India, which was a minor buyer of Russian oil prior to the Ukraine invasion, has since become Russia’s largest seaborne crude customer, importing nearly $20 billion worth of oil in the first five months of 2025 alone. The tariffs represent the most direct effort yet by Washington to penalize India for these purchases.

Economists suggest the immediate economic hit to India may be limited, as exports to the US account for around 2% of India’s GDP. However, the wider impact on investor confidence and strategic ties could be more significant, particularly as India is vying to attract manufacturers shifting supply chains out of China.

Companies like Apple, which have ramped up iPhone production in India, could be indirectly affected if trade relations worsen. Apple currently benefits from a temporary tariff exemption on consumer electronics, but the broader uncertainty could weigh on foreign investment decisions.

The tariffs are also expected to affect US importers, though their scope has yet to be detailed. Analysts warn that beyond trade, the aggressive rhetoric from Washington risks damaging decades of diplomatic progress between the two countries.