President Donald Trump announced on Wednesday that he will impose an additional 25% tariff on goods imported from India. This decision comes in response to India's continued purchases of Russian oil, which the U.S. government views as supporting Russia's war efforts in Ukraine. The new tariff will be added to an existing 25% tariff, bringing the total to 50%.

The executive order signed by Trump will take effect within 21 days. This timing allows for potential negotiations between the U.S., India, and Russia regarding the tariffs. Trump expressed his dissatisfaction with India's actions, stating, "They’re fuelling the war machine. And if they’re going to do that, then I’m not going to be happy."

Following the announcement, the iShares MSCI India ETF dropped significantly, oil prices surged, and the Indian rupee weakened against the dollar. The tariffs mark a significant escalation in trade tensions between the U.S. and India, which had been seen as a potential ally in countering China's influence in Asia.

The Indian government responded to the tariffs, calling them "unfortunate" and asserting that the actions are "unfair, unjustified and unreasonable." Foreign Ministry spokesman Randhir Jaiswal emphasized that India's energy imports are based on market factors and are essential for ensuring energy security for its population of 1.4 billion.

Trump's administration has been frustrated with India's reluctance to support U.S. sanctions against Russia. The U.S. has previously encouraged India to purchase Russian oil at a capped price of $60 per barrel, a strategy aimed at limiting revenue for the Kremlin. However, India has not aligned itself with the sanctions imposed by the U.S. and its allies.

In addition to India, Trump hinted at potential tariffs on other countries, including China, that also import Russian energy. He stated, "We’ll be doing quite a bit of that. We’ll see what happens over the next fairly short period of time."

The ongoing conflict in Ukraine has complicated international relations, and the U.S. is seeking to pressure Russia into a ceasefire. Trump has set an August 8 deadline for Russia to agree to a truce or face further sanctions. The Kremlin described recent talks with U.S. envoy Steve Witkoff as "useful and constructive," but no significant breakthroughs were reported.

As the situation develops, the economic implications for India could be substantial, especially as it navigates its relationship with both the U.S. and Russia.