Trump slaps 25% tariff on Iran’s trade partners; India stares at 75% levy

US President Donald Trump’s warning of a 25 per cent tariff on countries doing business with Iran has triggered concern in New Delhi, with potential implications for India’s already strained trade ties with Washington, its limited but sensitive commerce with Tehran and strategic interests such as the Chabahar port.

In a social media post, Trump said “any country doing business with the Islamic Republic of Iran will pay a tariff of 25 per cent on any and all business being done with the US”, describing the order as “final and conclusive”. The statement comes amid renewed US pressure to economically isolate Tehran.

For India, the warning carries added weight as Indian exports to the US are already facing steep duties. In the absence of a bilateral trade agreement, Indian goods are subject to a 25 per cent reciprocal tariff, along with an additional 25 per cent punitive levy imposed earlier over India’s continued purchase

of Russian crude oil.

If the proposed Iran-related tariff is applied cumulatively, total duties on Indian exports could rise to 75 per cent, among the highest imposed by the US on any major trading partner. India and Iran have traditionally shared steady trade ties. According to the Indian Embassy in Tehran, India exported goods worth $1.24 billion to Iran in 2024-25, while imports stood at $440 million, taking total bilateral trade to $1.68 billion. Indian exports largely fall under non-sanctioned humanitarian categories, including rice, tea, sugar and pharmaceuticals, besides manmade fibres, electrical machinery and artificial jewellery. Imports include dry fruits, chemicals and glassware.

However, government sources sought to play down the potential impact, noting that Iran does not figure among India’s top 50 trading partners. “India’s total trade with Iran was about $1.6 billion last year, barely 0.15 per cent of India’s overall trade. India’s share in Iran’s total imports is only around 2.3 per cent,” a source said, adding that the US tariff announcement was likely to have minimal direct impact on India. Iran’s largest import partners remain the UAE, China, Turkiye and the European Union.

The tariff threat has nonetheless revived questions over India’s strategic engagement at Chabahar port, developed as a key connectivity hub to Afghanistan and Central Asia. The project has previously received US sanctions waivers in recognition of its role in regional development and humanitarian access. There was no immediate clarity on whether the proposed tariff regime would affect Chabahar-linked trade or operations.

Beyond strategic concerns, Iran’s internal unrest is already affecting Indian exporters, particularly in the basmati rice sector. Industry bodies said payment delays, shipment uncertainty and rising risk perception have disrupted exports and triggered a sharp fall in domestic prices.

The Indian Rice Exporters Federation (IREF) said exporters were struggling to receive payments from Iranian buyers and urged caution in entering new contracts. India exported $468.1 million worth of basmati rice to Iran between April and November of the current fiscal, totalling 5.99 lakh tonnes, making Iran its largest basmati destination.

Internationally, the proposed tariff has drawn attention as it would affect not only India but also major Iran trading partners such as China, Turkiye and the UAE.

Former US official Evan A. Feigenbaum warned the move could further strain already fragile trade relationships. “So 50% tariffs on India—already the highest on any country in the world—weren’t enough for him. Now, it’s going to be another 25% for a layered tariff on India of 75%? It’s not as if there was much of a relationship left to tank but still... And congratulations to China, Turkey, and the UAE—all trading partners of Iran that he is about to whack with this too?” Feigenbaum posted on X.

For India, officials said, the coming weeks would be crucial as New Delhi assesses whether the US threat translates into policy—and how it intersects with humanitarian trade, strategic projects and an increasingly uncertain global trade environment.