India's $1.7 billion Iran trade at risk? Decoding Trump's 25% tariff threat for Indian traders

US President Donald Trump has announced a 25 per cent duty on every country engaging in trade with Iran, effective immediately. Trump's order is "final and conclusive", the 47th American president wrote on social network Truth Social early on January 13, without elaborating.

Trump finished his post with his typical 'thank you for your attention' remark.

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Shortly after Trump's announcement, the American embassy issued an advisory for its citizens, urging them to leave Iran and return to Turkiye or the US.

India's $1.7 billion Iran trade at risk?

Trump says nations doing business with Iran face 25% tariff on US trade

The development comes at a time when Iran is facing one of its biggest anti-government protests in years. Last year, Iran engaged in a 12-day war with Israel -- a US ally.

Last month, the US extended a six-month sanctions waiver for India to continue its operations at the Chabahar port, effective October 29, marking a diplomatic win for India. This enables India to continue to develop and oeprate the terminal at least till April next year without facing punitive sanctions from Washington.

This port is crucial for India's access to Afghanistan and Central Asia.

India-Iran Trade | What Trump's move against Iran means for India

Iran -- a member of top oil producers' grouping OPEC -- has already been heavily sanctioned by Washington for years. India is among Iran's top five trade partners by business value, after China, the UAE, Turkiye and Iraq.

The annual bilateral trade between India and Iran is calculated at $1.7 billion, with India exporting pharmaceutical products, basmati rice, fruits and vegetables, and sugar to the Middle Eastern country and importing items like chemicals and petroleum derivatives, agricultural goods, industrial materials and handicrafts from it.

According to Ministry of Commerce data, India's bilateral trade with Iran in January-October was recorded at $1.34 billion.

A quick take on Trump 2.0's move against Iran and its trade partners | What's in it for India?

• 25 per cent tariff to be imposed with immediate effect
• Trump's move is aimed at economically weakening Iran
• India already faces a 50% tariff in the US
• Iran is an OPEC member
• It is the world’s ninth-largest oil producer
• India mainly imports oil and dry fruits from Iran
• It primarily exports basmati rice, sugar, tea, spices and pharmaceuticals to Iran
• India has investments in the Chabahar Port project
• Trump 2.0 administration hasn't named any countries specifically

Iran-linked tariff could take India's tariff exposure to 75%: market guru Anil Singhvi

Zee Business Managing Editor Anil Singhvi pointed out that although India and Iran share long-standing trade ties, their positions on tariffs are not yet clear. Typically, India studies implications first and weighs its national interest with no hurry to tweak its policy.

If the Iran-linked tariff takes effect, India's total tariff exposure could rise to as high as 75 per cent, according to the market wizard.

Fuel, Iran's stronghold

Fuel makes up Iran's biggest export by value. The costliest items on its import bill include intermediate goods, vegetables, machinery and equipment.

In FY25, India exported goods worth an estimated $1.24 billion to Iran while Iran exported goods worth $0.44 billion to India -- taking the bilateral trade between both countries to $1.68 billion.

India-US trade relations

Indian exporters are already paying 50 per cent tariffs on goods shipped to the US since August last year, when the Trump 2.0 administration's additional 25 per cent duty, over India's import of Russian oil, took effect.

Optimism about a potential India-US trade deal was rekindled this week after US Ambassador Sergio Gor said that the friendship between PM Narendra Modi and the US president is "real", and "real friends can disagree" but they always "resolve their differences" in the end.

Gor's remarks allayed some of the concerns about the status of US-India trade talks after Trump's move last week to criticise India's position on Russian crude oil supplies. Thanking Trump for picking him for the role, Gor said the US president's mission is to strengthen ties between the oldest and largest democracies of the world.

India and the US, according to Gor, are continuously and actively engaged in trade deal-related talks. The first call between negotiators from both sides are scheduled to take place later on Tuesday.