US President Donald Trump has ruled out trade negotiations with India amid 50% tariffs, stating that there will be no trade talks until the issues between the two countries are resolved.

“No, not until we get it resolved,” he said in response to a question on the possibility of trade talks with India after he announced 50% tariffs.

This comes a day after Trump warned of more sanctions on countries that are buying Russian oil.

Moody's expects India's real GDP growth to slow by around 0.3 percentage points compared with its current forecast of 6.3% growth for fiscal 2025-26 if India continues to procure Russian oil at the expense of the headline 50% tariff rate on goods it ships to the US. The ratings agency, however, added that resilient domestic demand and the strength of services sector will mitigate the strain.

Beyond 2025, the much wider tariff gap compared with other Asia-Pacific countries would severely curtail India’s ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics, and may even reverse some of the gains made in recent years in attracting related investments, Moody's warned.

On the other hand, a decision to curtail Russian oil imports to avoid the imposition of the penalty tariff could pose difficulties in procuring alternative sources of crude petroleum in sufficient amounts and in a timely fashion, proving disruptive to economic growth if the overarching supply of oil to the economy is interrupted, cautioned the ratings agency. Since India is among the world's largest oil importers, a shift towards non-Russian oil would tighten supply elsewhere, raise prices and pass through to higher inflation, it said. "The consequently larger import bill would also contribute to a wider current account deficit against the backdrop of weaker tariff competitiveness that potentially undermines investment inflows," said Moody's.

Since 2022, India has increasingly ramped up its crude oil imports from Russia as demand from the latter's traditional offtakers dried up amid sanctions tied to its invasion of Ukraine. India has been able to procure at least some of its purchases of Russian oil at below global prices, which has helped insulate India's inflation from the pass-through of global commodity price movements, while preempting pressures on its current account deficit, said Moody’s Ratings.

India's imports of Russian crude rose to $56.8 billion in 2024 from $2.8 billion in 2021, corresponding to a rise in India's share of total crude oil imports to 35.5% from 2.2%, the ratings agency said. In 2024, China was the only country that imported more oil from Russia, it added.

On August 6, Trump signed an executive order that imposed an additional 25% “penalty” tariff on imports from India for continuing to purchase oil from Russia, taking the overall tariffs on Indian goods to 50%. The additional tariff increases the potential strain from the 25% rate for the so-called reciprocal tariff that was announced the previous week because it widens the gap compared with the 15-20% tariff rates for other countries in Asia-Pacific, according to Moody’s Ratings. Countries in the Asia-Pacific are vying for a greater share of trade and investment flows amid a restructuring of supply chains set off by US policy shifts.

While the earlier tariff rate of 25% is applicable from August 1, the new tariff levy will be effective after 21 days, or August 27. Trump's latest executive order says the new rate of duty will be effective for goods entering the US 21 days after this order is issued. However, goods already shipped to the US before that will not be affected as they are entered for use or taken for storage before September 17, 2025.

Meanwhile, the Indian government said that India will protect its national interests. "India will take all actions necessary to protect its national interests. The United States has in recent days targeted India’s oil imports from Russia," the ministry of external affairs said in a statement. "We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India," the MEA statement said. "It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," it added.