Trump Warns of 25% Tariff on Iran Trade, India May Feel Impact

Former US President Donald Trump has warned of imposing a 25% tariff on countries that continue trade with Iran, a move aimed at increasing economic pressure on Tehran. While no official executive order has been issued yet, experts believe that if the decision is implemented, India could also feel its impact.

Crude Oil Prices Rise After Tariff Warning

The first visible impact of Trump’s warning has been seen in the global crude oil market. Following the news, Brent crude prices crossed $64 per barrel, marking their highest level since November.

India imports the majority of its crude oil requirements. Any sustained rise in oil prices could lead to higher petrol and diesel prices, directly affecting inflation, household budgets, and the overall Indian economy.

Will India Be Forced to Reduce Trade With Iran?

India-Iran bilateral trade is relatively limited, with total annual trade valued at less than $4 billion. India mainly exports rice, tea, and pharmaceuticals to Iran.

Experts suggest that given India’s strategic and economic ties with the United States, New Delhi is unlikely to risk additional 25% US tariffs for such limited exports. This could potentially force India to scale down its trade relations with Iran if the tariff threat becomes reality.

Chabahar Port Remains India’s Biggest Strategic Concern

India’s primary concern is Iran’s Chabahar Port, located on Iran’s south-western coast. The port is a critical gateway for India to access Afghanistan and Central Asia, bypassing Pakistan.

India operates the port under a long-term agreement. The US had earlier granted a six-month sanctions waiver for Chabahar, which remains valid until April. However, it is unclear whether this exemption would still apply if the proposed tariff policy comes into force.

India Maintains Silence, Watches Developments Closely

So far, India has not officially responded to Trump’s tariff warning. Given the importance of US-India relations, the Modi government is expected to adopt a carefully balanced and diplomatic approach.

The proposed tariff could also impact China, Iran’s largest trading partner and biggest oil buyer. However, analysts believe Trump may avoid escalating trade tensions with China amid ongoing efforts to maintain trade balance.

Could the Tariff Issue Be Scrapped?

An important legal development could decide the fate of this tariff threat. The US Supreme Court is expected to rule soon on whether Trump has the authority under the International Emergency Economic Powers Act (IEEPA) to impose such tariffs.

If the court rules against this authority, the entire tariff proposal could be invalidated, bringing the issue to an abrupt end.

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