Raghuram Rajan Says India Faced 50% US Tariff for Countering Trump’s Ceasefire Claim, Not Russian Oil

Former RBI Governor Raghuram Rajan has said that the 50% US tariff on Indian exports had little to do with New Delhi’s purchase of Russian oil and far more to do with India contradicting US President Donald Trump’s claim of mediating the ceasefire during the four-day conflict with Pakistan in May.

Speaking at the UBS Centre for Economics in Society, University of Zurich, Rajan argued that the tariff decision was shaped primarily by the “personality in the White House” and the administration’s sensitivity to India’s public stance on the conflict—while Pakistan, he said, “played it right” and walked away with significantly lower tariffs of 19%.

Tariffs linked to India contradicting Trump’s mediation claim

Rajan referred to the brief military escalation in May, when India carried out precision strikes on terror hubs in Pakistan and PoK after 26 civilians were killed in Pahalgam. Pakistan retaliated with drone and missile attacks, prompting India to target military and nuclear-linked facilities near Islamabad.

While Pakistan publicly thanked Trump for the ceasefire, Indian military officials clarified that Rawalpindi reached out directly to New Delhi twice seeking a pause, asserting the ceasefire was a bilateral arrangement, not a US-brokered one.

Rajan said this contradiction appears to have irked the Trump administration more than India’s discounted Russian oil imports.

“Russian oil was not the central issue”

Responding to a question on whether cutting Russian oil purchases would reduce tensions, Rajan said the US had shown leniency toward other nations buying Russian crude—citing Hungary under Viktor Orbán, whose oil deals Trump publicly defended.

He emphasised that geopolitical friction stemmed instead from the optics and narrative surrounding the May conflict.

“Pakistan played it the right way. India tried to argue the ceasefire happened without Trump. The truth is probably somewhere in between. India got 50% tariffs; Pakistan got 19%,” Rajan remarked.

Tariff escalation overshadowed by personal attacks

The US imposed steep tariffs on Indian goods in August, accusing New Delhi of “funding the Ukraine war” through Russian oil purchases and maintaining a “one-sided” trade relationship.

The situation worsened when Trump aides such as Peter Navarro and Stephen Miller launched personal attacks on Indian leaders, turning a trade dispute into a diplomatic confrontation.

India firmly rejected mediation claims

Prime Minister Narendra Modi, through Foreign Secretary Vikram Misri, told Trump that India had never sought third-party mediation and would not do so in the future—reiterating New Delhi’s long-standing policy that India-Pakistan issues are strictly bilateral.

Indian officials repeatedly clarified that the ceasefire stemmed from direct military communication channels, not US involvement.

Rajan concluded that he hopes “sanity prevails” in the long term between the two partners, noting that despite the tensions, the fundamentals of the India-US relationship remain strong.