Trump Seals Oil Deal With Pakistan, Slaps Tariffs on Indian Goods Over Russian Ties

New Delhi | July 31, 2025 : In a surprise move that may significantly alter South Asia’s energy and trade dynamics, US President Donald Trump has announced a new oil partnership with Pakistan while simultaneously imposing a 25 percent tariff on Indian goods. The back-to-back developments have sparked diplomatic unease in New Delhi and may complicate the ongoing Indo-US trade negotiations.

The oil agreement with Pakistan was announced on Trump’s social media platform, Truth Social, where he revealed that a major American oil company would soon be selected to lead the exploration and development of Pakistan’s modest oil reserves. “Who knows, maybe they’ll be selling oil to India someday!” Trump wrote, adding a provocative twist to the announcement.

Just hours prior to unveiling the Pakistan deal, Trump declared that all Indian goods entering the US will face a 25 percent tariff starting August 1. The move is in response to India’s continued purchase of Russian oil and military equipment — a sore point for Washington as it continues to press global allies to isolate Moscow amid the ongoing Russia-Ukraine war.

“India is our friend, but they buy most of their military gear from Russia and are one of its top energy buyers — not good!” Trump stated, also warning of a possible additional penalty, potentially reaching 100 percent.

India, the world’s third-largest oil consumer, imports nearly 88 percent of its oil needs. Russia currently accounts for around 40 percent of India’s oil imports, followed by Iraq, Saudi Arabia, the UAE, and the US. While India has gradually diversified its suppliers, Russian oil remains vital due to its discounted pricing amid Western sanctions.

Though the US is also a growing supplier, Washington’s insistence on cutting ties with Moscow has placed New Delhi in a delicate balancing act between strategic autonomy and trade relations with the West.

The tariff announcement comes ahead of the sixth round of India-US trade negotiations, scheduled for August. Hopes for a breakthrough deal now seem dim, with experts saying a final agreement may be pushed to September or even later. Indian policymakers reportedly anticipated the 25 percent tariff but were caught off guard by the possibility of a harsher, undefined penalty.

Officials in New Delhi may now seek tariff relief similar to recent US deals with other countries. However, the timing — coinciding with a public deal with Pakistan — is likely to heighten regional sensitivities.

The US-Pakistan oil partnership has also raised eyebrows in India, particularly in light of escalating tensions between New Delhi and Islamabad following a deadly terror attack in Pahalgam in May, blamed on Pakistan-based militants. Trump, however, claimed credit for brokering a "quiet ceasefire" between the two nuclear-armed neighbours — a claim India has strongly denied.

Trump also signaled that his administration is actively reviewing trade relationships globally. He mentioned plans for a 25 percent tariff on South Korean imports, hinting at ongoing renegotiations aimed at reducing the US trade deficit.

“All this will help reduce our trade deficit,” Trump said, underscoring his administration’s tough trade-first approach as the 2026 elections loom.