US tariffs on Iran-linked trade spark tensions but spare India’s limited ties
Tensions over trade with Iran have escalated after the US imposed fresh tariffs on countries dealing with the nation. In August, former US President Donald Trump introduced a 50% tariff on Indian goods, including an extra 25% duty linked to India’s purchase of Russian crude oil. The move follows earlier threats of penalties for nations maintaining economic ties with Iran.
Meanwhile, India’s trade with Iran remains small, totalling just USD 1.6 billion in 2024—around 0.15% of its overall trade volume.
India halted oil imports from Iran in May 2019 after the US reimposed sanctions. Despite this, the country has stayed involved in Iran’s Chabahar port project, signing a 10-year agreement to develop a terminal there. The Trump administration had temporarily exempted the Chabahar port project from sanctions for six months, allowing limited cooperation.
China remains Iran’s largest trading partner in 2024, followed by the UAE, Iraq, India, Turkey, and Germany, which trades around 1.3 to 1.5 billion euros worth of goods with Iran annually. Iran’s total imports this year reached nearly USD 68 billion, with the UAE, China, Turkey, and the EU as the top suppliers.
The new US tariffs could push duties on Indian goods beyond 50%, though analysts expect minimal disruption to India-Iran trade. This comes as Iran faces internal unrest, with anti-government protests now claiming over 2,000 lives.
Trump’s earlier warnings targeted any nation continuing business with Iran. The latest tariffs signal a broader crackdown, though their practical effect on India’s limited trade with Iran may be restricted.
The US tariffs add pressure on countries trading with Iran, yet India’s exposure remains low. With trade valued at just USD 1.6 billion, the economic impact is likely to stay contained. The focus now shifts to how other nations, particularly China and the UAE, will navigate their much larger trade relationships with Iran under the new US measures.
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