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‘Minimal impact’: How Trump's 25% tariffs on Iran's trading partners will hit India
US President Donald Trump on Tuesday said that the 25% tariff on countries trading with Iran will become “effective immediately”
US President Donald Trump’s threat of a 25% tariff on countries doing business with Iran is expected to have a “minimal impact” on India, as trade between New Delhi and Tehran is currently worth less than $2 billion, people familiar with the matter said on Tuesday.
After threatening action against Iran over the past few days over the government’s crackdown on widespread protests in Tehran and other Iranian cities, Trump said on Tuesday that the 25% tariff on countries trading with Iran will become “effective immediately”. The Iranian government’s crackdown on protesters has reportedly claimed hundreds of lives in recent days.
“Effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America. This Order is final and conclusive,” Trump said on social media.
There was lack of clarity on whether the US has begun implementing the new tariff in the absence of any formal notification, the people said on condition of anonymity. If it were to kick in against India, it would add to the 50% tariffs already in place, including a 25% punitive levy over Russian energy purchases.
The people, however, said the 25% tariff announced by Trump for trade partners of Iran is expected to have a “minimal impact” on India. Iran doesn’t figure among India’s top 50 global trading partners. India’s trade with Iran during 2024-25 was worth $1.68 billion, or about 0.15% of the country’s total trade, and imports from Iran amounted to $0.44 billion.
“India’s trade value with Iran is expected to go down further in the current financial year due to external economic factors,” one of the people said.
India stopped importing oil from Iran – once the main commodity in two-way trade – in May 2019 because of sanctions imposed by Trump in his first term. This resulted in two-way trade plummeting from $17.03 billion in 2018-19 to the current low levels.
The people contrasted India’s position with Iran’s trade with its key economic partners such as China, Iraq, the United Arab Emirates and Turkiye, all of which witnessed growth in trade volumes in recent years despite crippling Western sanctions.
Iran’s total imports in 2024 were worth almost $68 billion, and the country’s leading import partners were the UAE ($21 billion or 30% of Tehran’s imports), China ($17 billion or 26%), Turkiye ($11 billion or 16%), and the European Union ($6 billion or 9%).
Indian banks have also largely reduced their involvement in payments because of fears of exposure to sanctions in their operations in the West.
However, India continues to have a significant presence in Iran’s strategic Chabahar port, with the two sides concluding a 10-year agreement on the development of a terminal at the facility on the Gulf of Oman, and the Trump administration granted a six-month exemption for US sanctions applicable to the port in October 2024.
