The President’s remarks came even as New Delhi is yet to confirm any halt in oil purchases from Moscow after Washington announced a 25 per cent duty in addition to a 25 per cent tariffs on Indian goods last month.
US President Donald Trump on Friday claimed Russia lost India as one of its oil clients after Washington announced a penalty on New Delhi over the purchases, but indicated he may not impose such secondary tariffs on countries continuing to procure Russian crude oil.
The President’s remarks came even as New Delhi is yet to confirm any halt in oil purchases from Moscow after Washington announced a 25 per cent duty in addition to a 25 per cent tariffs on Indian goods last month. The additional duty is scheduled to come into effect on August 27.
The US had threatened sanctions on Moscow and secondary sanctions on countries that buy its oil if no moves are made to end the war in Ukraine. China and India are the top two buyers of Russian oil.
“Well, he (Russian President Vladimir Putin) lost an oil client, so to speak, which is India, which was doing about 40 per cent of the oil. China, as you know, is doing a lot…And if I did what’s called a secondary sanction, or a secondary tariff, it would be very devastating from their standpoint. If I have to do it, I’ll do it. Maybe I won’t have to do it,” Mr Trump told Fox News as he departed for Alaska for a high-stakes meeting with his Russian counterpart Vladimir Putin.
On August 6, Mr Trump escalated his tariff offensive against India by slapping an additional 25 per cent duty and subsequently doubling it to 50 per cent on Indian goods over New Delhi’s continuous imports of Russian oil.
India condemned the “unfair, unjustified and unreasonable” move that is likely to hit sectors such as textiles, marine and leather exports hard. Prime Minister Narendra Modi earlier said New Delhi would not back down in the face of economic pressure.
With this action singling out New Delhi for the Russian oil imports, India will attract the highest US tariff of 50 per cent along with Brazil. Both Russia and China, among others, have slammed Mr Trump for exerting illegal trade pressure on India.
A Bloomberg report claimed India’s state-owned refiners stopped buying Russian crude after Mr Trump’s action even though the Centre is yet to make any announcement in this regard.
On Thursday, Indian Oil Corporation chairman AS Sahney said India has not halted oil purchases from Russia and continues to buy solely on the basis of economic considerations.
India became the largest customer of Russian oil in 2022, after Western countries shunned Russian oil and imposed sanctions on Moscow for its invasion of Ukraine.
Apparel and textile market
Indian textile and apparel exporters are grappling with a significant crisis following the United States’ recent decision to hike import tariffs on Indian goods to a steep 50%. This sharp increase has raised alarm across the Indian textile and apparel industry, as it severely undermines their competitive edge in the global market.
Compared to India, key competitors like Bangladesh, Vietnam, and Sri Lanka are facing much lower tariffs—only 20%—giving them a considerable price advantage in the crucial US market. Industry experts warn that the disparity could lead to a sharp decline in India’s apparel exports, potential job losses in the sector, and further strain on already struggling small and medium enterprises (SMEs).
In 2024, the US imported about $107.72 billion worth of textile products, of which $80 billion was ready-made garments. Of this, China accounted for 21%, Vietnam 19%, Bangladesh 9%, India 6% and Sri Lanka 3%. As a result, India is currently the fourth largest supplier of ready-made garments exports to the US.
China is already under an additional 30% tariff and if US-China talks fail, it could increase to 34%. Indian exporters were hoping to use this opportunity to strengthen their position in the US market. However, the recent imposition of additional tariffs has also dealt a major blow to that prospect.
The Confederation of Indian Textile Industry (CITI) has called the move a serious blow, particularly at a time when global demand is sluggish and production costs are rising. Exporters fear a major loss of market share in the United States, which is one of India’s top destinations for garments and textiles.
In such a situation, will India consider transshipment from Bangladesh? In that case, the terms of the US Rule of Origin for India may need to be looked at. Usually, India faces rules of origin conditions when exporting goods to the United States.
Under Trump’s April 2, 2025 Executive Order and CSMS #64680374, the new reciprocal tariff regime imposes additional U.S. tariffs based solely on the exporter’s country of origin, not on rules of origin or value-added thresholds like in FTAs. This means Indian goods re-exported via Bangladesh without significant transformation will still face U.S. tariffs as Indian-origin goods.
To avoid this, Bangladesh must carry out substantial transformation—processing that changes the product’s nature or tariff classification, which is currently not feasible due to limited infrastructure. For India to benefit, it would need to invest in real processing capacity in Bangladesh as in the form of FDI, enabling the products to legally qualify as Bangladeshi-origin under U.S. customs rules. Simple re-exporting does not alter customs liability under the current U.S. system.
Bangladesh hit by India’s transshipment ban
In April 2025, India abruptly scrapped the transshipment facility for Bangladeshi goods, which allowed Bangladesh to ship goods to Indian sea and air ports via Indian land ports for export to third countries. Under this arrangement, Bangladesh exported about 34,900 tons of ready-made garments worth about $462 million to 36 countries, including Europe and the United States.
Air freight rates from Dhaka have increased since India scrapped the transshipment facility. Currently, the cost of transporting goods from Dhaka to Europe per kilogram has risen from $6.30 to $6.50 and from $7.50 to $8.00 to the United States. However, the cost of shipping the same type of goods from Kolkata to India is $4 and from the Maldives to the Maldives is only $3.50 per kilogram. As a result, the competitive position of Bangladeshi goods in the international market is under threat due to this increase in costs.
However, following India’s abrupt shutdown of transshipment facilities, Bangladesh has swiftly expanded its air cargo infrastructure to maintain smooth export operations, especially for ready-made garments. The Civil Aviation Authority of Bangladesh (CAAB) and Biman Bangladesh Airlines are leading the effort, focusing on increasing capacity, manpower, and reducing transport costs.
CAAB has already deployed additional staff at Dhaka’s Hazrat Shahjalal International Airport, while full-scale cargo operations began at Sylhet’s Osmani International Airport on April 27, with Chittagong Airport next in line. Customs clearance processes are also being accelerated. Additionally, seaport capacity has been expanded and made more efficient, further supporting uninterrupted export flows.
Bangladesh’s opportunity grab US markets
India was optimistic about expanding its apparel exports to the U.S. after President Donald Trump imposed higher reciprocal tariffs on key competitors like Bangladesh, Cambodia, and Indonesia. A report by the State Bank of India (SBI) highlighted this potential, as covered by The Economic Times and The Hindu Business Line. India aimed to capitalize on the shifting trade dynamics to capture a larger share of the U.S. apparel market. However, the situation has turned upside down for now.
Bangladesh now has a competitive advantage over India. With a lower tariff rate, Bangladesh may gain shifted orders from India and has the opportunity to increase its export share in the US market. Moreover, under the new U.S. tariff policy, if an exported product contains 20% or more raw materials from the United States, that portion is exempt from the countervailing duty. For example, if Bangladesh exports garments made with 50% U.S. cotton, then the new 20% duty won’t apply to that 50% portion. This gives Bangladesh a chance to gain partial tariff relief by increasing its use of U.S. raw materials—particularly cotton—which could also help reduce the trade deficit with the U.S.
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