On 12th January, President of the United States, Donald Trump, announced a sweeping new tariff targeting countries that continue to do business with Iran. In a post on social media platform Truth Social, Trump declared that an additional 25% tariff would be applied “effective immediately” on all such nations’ trade with the United States.
His post read, “Effective immediately, 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 United States of America.” The statement did not clarify the mechanism of enforcement or specify which sectors would be affected.
White House signals diplomacy, keeps military options open
Earlier in the day, the White House indicated that the administration remains open to diplomatic engagement with Iran. The statement came as unrest continues inside the country. White House Press Secretary Caroline Leavitt said the President is focused on preventing further violence while evaluating private communications from Tehran.
“He certainly does not want to see people being killed in the streets of Tehran,” Leavitt told reporters, adding that the tone of private messages from Iranian officials differs from the regime’s public statements.
When asked about denuclearisation, Leavitt avoided specifics but stressed that Trump is keeping all options available. She said military action, including airstrikes, remains on the table if the situation escalates, even as diplomacy continues to be the preferred route.
What new tariff means for India
For India, the announcement carries serious economic implications. According to the existing tariff structures, India is already paying a 50% tariff in the US market. The new measure could push total duties on Indian exports to the US market to as high as 75%.
India has maintained a long standing but carefully calibrated trading relationship with Iran. Furthermore, according to the Ministry of External Affairs, India has consistently ranked among Tehran’s top trading partners in recent years.
Indian exports to Iran include basmati rice, tea, sugar, man-made staple fibres, pharmaceuticals, imitation jewellery and electrical equipment. Imports from Iran largely consist of dry fruits, organic and inorganic chemicals and glassware.
Among these, the basmati rice trade is particularly vulnerable. Iran is a major overseas market for Indian basmati. India exports around one million tonnes of basmati rice to Iran every year, with estimates placing the trade at nearly 12 lakh tonnes valued at around Rs 12,000 crore. If this trade channel is disrupted, it will directly hit farmers, exporters, and rice mills concentrated in north Indian states.
That said, Iran is not among India’s top five overall trading partners. India’s largest export destinations are the United States, United Arab Emirates, Netherlands, China and the United Kingdom. These five nations account for around 41% of exports.
In strategic terms, the bigger concern is with Chabahar Port, where India has a major stake as a gateway to Afghanistan and Central Asia, bypassing Pakistan. While the US extended a sanctions waiver for Chabahar until April this year, the exemption was earlier withdrawn in September 2025. If the waiver lapses again, Indian entities operating or investing in the port may face penalties under the Iran Freedom and Counter Proliferation Act, which will complicate regional outreach and Afghanistan strategy for India.
