US President Donald Trump’s announcement of a 25 per cent tariff on Indian imports along with a penalty for procuring military equipment and energy from Russia comes barely a day before the intended deadline to conclude agreements. It has key consequences.One, it puts India at a disadvantage in comparison to competitors. Two, it put the onus back on the Indian side to fast-track its negotiations for an interim deal with the US.Indications are that the outer limit for a deal, currently pegged at around October from New Delhi’s perspective, might need to be brought forward.What complicates the equation for India is that the Chinese are at an advanced stage of negotiations towards a deal which could have a favourable tariff rate and potential waivers on secondary tariffs, which include the tariff on account of Russian oil imports and the proposed 10 per cent BRICS tariff.Though Trump did not specify the rate of penalty for India on account of Russian oil and defence imports, earlier statements made by Trump indicate that it could be to the tune of 100 per cent.Read | Trump hits India with 25% tariff plus a Russia penaltyThis way, India stands to potentially lose the US tariff advantage vis-a-vis China at least till the time a deal is struck, even if Beijing, too, faces the same penalty for importing from Russia.Beijing does stand to have a first-mover advantage as it has already wrapped up its negotiations ahead of India with the US. A final China deal, however, is still elusive.Story continues below this adHowever, some experts said that Trump’s charges regarding non-tariff barriers by India are unlikely to stand up to scrutiny as India’s tariffs are WTO compliant.Think tank Global Trade Research Initiative (GTRI) said that by refusing to cross its red lines, particularly on agriculture, India has helped avoid “the trap of a one-sided deal”. “India’s tariffs are WTO-compliant, non-tariff barriers are common globally, and discounted Russian oil has helped India manage inflation during global volatility…India is not alone; over 90 countries face similar US pressure. A deal may still emerge, but only on fair terms. For now, India’s principled stand has avoided the trap of a one-sided deal, and that’s a success,” GTRI said in a statement.Trump on Monday had cut short a deadline for Moscow to make progress toward a Ukraine war peace deal or see its oil customers slapped with secondary tariffs of 100 per cent in 10-12 days. “So I think anyone who buys sanctioned Russian oil should be ready for this,” US Treasury Secretary Scott Bessent had said.Chinese officials had responded saying China was a sovereign nation with energy needs, and oil purchases would be based on the country’s internal policies, Bessent said. “The Chinese take their sovereignty very seriously. We don’t want to impede on their sovereignty, so they would like to pay a 100 per cent tariff,” Bessent said.Story continues below this adChina is the largest buyer of Russian oil, at about 2 million barrels per day, followed by India (just under 2 million a day) and Turkey. China had agreed to cut tariffs on US goods to 10 per cent from 125 per cent in May, while the US had agreed to lower tariffs on Chinese goods to 30 per cent from 145 per cent.The Trump administration had set a deadline of August 1 to wrap up agreements with the US President having threatened tariffs of up to 25 per cent on Indian imports if the elusive bilateral trade agreement between the two countries is not in place by that date.“They are going to pay 25 per cent,” Trump had said on Tuesday. US Trade Representative Jamieson Greer had told CNBC on Monday that the trade agreement with India would need more discussion between the two countries.Trump had, in April, set the tariff on Indian goods imported into the US at 26 per cent on April 2, before pausing his so-called “reciprocal” levies.India DealStory continues below this adGiven how talks between Indian and US negotiators have proceeded, an interim deal still seems distant and is unlikely to be clinched before September, with October a possible outer deadline.Indications are a sixth round of talks between the two negotiating teams will take discussions forward in August.For New Delhi, a tariff of 25 per cent is bad news, but something that policy circles seem to have already factored in. This rate essentially means going back to nearly the reciprocal tariff level, which was 26 per cent.However, the penalty implies an additional setback for India. The resolve from the Indian side would be to push the interim deal in the meantime, to ensure that Indian goods manage a discounted headline tariff, as has been wrangled by other countries that have struck a deal over the last couple of weeks.Story continues below this adWithout the BRICS levy and the penalty, India’s 25 per cent compares reasonably well with countries such as Indonesia (19 per cent) and Vietnam (20-40 per cent) that have wrapped up deals, and could have had an advantage over the current levels of tariffs faced by China (30-34 per cent) and Bangladesh (35 per cent).The equation changes when the additional levies are factored in, especially the one triggered by Russian purchase. There is no clarity yet on how that will be applied.Once the interim deal is clinched, if the final US headline tariff on India ends up between 10 per cent and 15 per cent, the tariff points offered to the UK and Japan, respectively, New Delhi would have reasons to be satisfied.The advantage starts to taper off once the tariff goes over 15 per cent and inches up closer to 20 per cent, as was offered to Vietnam. A trans-shipment clause, of the kind slapped on Vietnam which levies an additional 20 per cent tariff, could be a problem for India too, given that a lot of Indian exports have inputs and intermediate goods in sectors such as pharma, engineering goods and electronics coming in from outside, including China.Story continues below this adAlso, New Delhi will be closely looking for clarity on the final American duty offer on China, given its belief that Trump will maintain a tariff differential.US and Chinese officials wrapped up two days of discussions in Stockholm on Tuesday, with no breakthrough announced. After the talks, China’s top trade negotiator Li Chenggang declared that the two sides agreed to push for an extension of a 90-day tariff truce struck in mid-May, without specifying when and for how long this extension kicks in.For Indian negotiators, extra tariffs on steel and aluminium, over and above the baseline, is an added complication, alongside the proposed BRICS tariff. Trump’s insistence on zero duty access to the Indian markets, like in its deals with Vietnam and Indonesia, is also a problem for India.New Delhi is, however, willing to offer concessions on high-value purchases that the US is keen to package as part of its tariff-setting exercise, like the way it got the EU and Japan to sign up for a commitment on investments and purchases of American goods. India may be open to purchasing three big-ticket items from the US: defence equipment, natural gas imports and nuclear reactors.Story continues below this adOn specific sectors such as auto or consumer non-durables, India is likely to follow a quota system that progressively opens up market access over a span of multiple years, like it did in the UK deal signed last week.Once the official level discussions wrap up by mid-August, there is a sense that a final call on the deal could come down to a conversation between the two leaders, Prime Minister Narendra Modi and Trump.This is especially so since it is Trump who is the trade negotiator-in-chief. For India, the best-case scenario would be to get a deal of some sort now, and then build on that in the future negotiations that could run into 2026, experts said. With Trump announcing the tariffs and penalties on India, that phone call could come in earlier.Exporters StruggleMeanwhile, as the uncertainty continues, India’s exporters are struggling to navigate the way forward because buyers in the US are not clear as to what the final tariff will be, and are consequently holding back orders.Story continues below this adThe higher tariffs that the US has imposed on China means a number of Chinese manufacturers are now also rerouting shipments to Europe at throwaway prices, which is impacting India’s exports to the EU as well. India, like other countries, had frontloaded shipments ahead of the reciprocal tariff deadline for the ongoing Spring-Summer season, but there is now a question mark over the orders for the Fall-Winter season from October to March.The higher-than-anticipated US tariff rate could also dent India’s growth prospects, economists said.“When the US had initially imposed tariffs, we had lowered our forecast of India’s GDP expansion to 6.2% for FY2026, presuming a tepid rise in exports and a delay in private capex. The tariff (and penalty) now proposed by the US is higher than what we had anticipated, and is therefore likely to pose a headwind to India’s GDP growth. The extent of the downside will depend on the size of the penalties imposed,” Aditi Nayar, Chief Economist, ICRA said.