How is US President Trump doing What he is Doing? India and Tariffs (Part II)

In the last post titled "How is US President Trump doing What he is Doing? India and Tariffs (Part I)", we discussed how the US President imposed the "reciprocal tariffs" on India through the Executive Order 14257 of 2 April 2025 ("Order"), including Sections 1 and 2 of the Order. In this post, we continue to discuss the Executive Order 14257.

Section 3(a) of the Order:

• imposed a uniform "additional ad valorem" duty of 10 percent%, which would apply from 5 April 2025;
• imposed a "country-specific ad valorem rates of duty" as per Annex I to the Order on articles imported into the US, which was to apply from 9 April 2025;

Section 3(b) provided for exceptions from the ad valorem duties for articles mentioned in Annex II of the Order. Types of the articles forming a part of Annex II are elaborated in Section 3(b):

• (i) articles encompassed by 50 U.S.C. 1702(b); 
• (ii) articles and derivatives of steel and aluminum subject to the duties imposed various laws and proclamations mentioned in the Order;
• (iii) automobiles and automotive parts subject to the additional duties imposed pursuant to various laws and proclamations mentioned in the Order; 
• (iv) other products enumerated in Annex II to the Order, including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products; 
• (v) articles from a trading partner subject to the rates set forth in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS); and 
• (vi) all articles that may become subject to duties pursuant to future actions under section 232 of the Trade Expansion Act of 1962. 

Section 3(c) clarified that the rates established under the Order were "in addition to any other duties, fees, taxes, exactions, or charges applicable to such imported articles". Exceptions to this general rule were provided in Sections 3(d) and 3(e) of the Order. These exceptions were specific to Canada and Mexico. 

Section 3(f) provided that the ad valorem rates of duty in the Order applied only to non-U.S. content of a subject article where at least 20% of the value of the subject article is U.S. originating. 

The second executive order relevant for India is the Additional Tariff imposed on India for importing Russian Crude Oil through Executive Order 14329 dated 6 August 2025. The Executive Order is titled "Addressing Threats to the United States by the Government of the Russian Federation" ("Russian Crude Order").

The Russian Crude Order was imposed purportedly under "the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601  et seq.), section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), and section 301 of title 3, United States Code". 

Earlier, Executive Order 14066 (8 March 2022) titled "Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine" ("Earlier Order") was issued under the Biden Administration. The Russian Crude Order was issued further to this Order.

The Russian Crude Order is titled "Addressing Threats to the United States by the Government of the Russian Federation". Section 1 of this Order provides a background for the Order. It stated that the Earlier Order prevented import into the US of Russian crude oil, among other things. 

It further stated that the situation, as informed by "various senior officials" that the actions of Russia regarding Ukraine justifies continuance of national emergency described in Executive Order 14066 and that Russian actions and policies continued "to pose an unusual and extraordinary threat to the national security and foreign policy of the United States."

In order to deal with the national emergency, the Russian Crude Order stated that it was necessary and appropriate to impose additional ad valorem duty on imports from India: 

"To deal with the national emergency described in Executive Order 14066, I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil. In my judgment, imposing tariffs, as described below, in addition to maintaining the other measures taken to address the national emergency described in Executive Order 14066, will more effectively deal with the national emergency described in Executive Order 14066." (emphasised)

Section 7(a) of the Russian Crude Order defined “Russian Federation oil” to mean "crude oil or petroleum products extracted, refined, or exported from the Russian Federation, regardless of the nationality of the entity involved in the production or sale of such crude oil or petroleum products." Thus, this included production and sale by Indian companies of Russian crude oil in Russia. 

Section 7(b) defined the term “indirectly importing” to include "purchasing Russian Federation oil through intermediaries or third countries where the origin of the oil can reasonably be traced to Russia, as determined by the Secretary of Commerce in consultation with the Secretary of State and the Secretary of the Treasury."

Section 2 of the Russian Crude Order is akin to a charging provision in a taxing statute. Section 2 imposed "an additional ad valorem rate of duty of 25 percent" on articles imposed from India. The order was to be effective 21 days after 6 August 2025.

Section 3 clarified that this duty was "in addition to any other duties, fees, taxes, exactions, and charges applicable to such imports".

Section 4(b) of this order stated: "Should a foreign country retaliate against the United States in response to this action, I may modify this order to ensure the efficacy of the actions herein ordered."

Section 4(c) is important. It stated that if Russia or a foreign country impacted by the Russian Crude Order take significant steps to address the national emergency, (i.e., Russian invasion of Ukraine, although not explicitly stated) "and align sufficiently with the United States on national security, foreign policy, and economic matters, I may further modify this order." (emphasised).

It is clear from this that in effect US wanted India not only to stop crude oil imports but to align with it on "national security, foreign policy and economic matters"! No wonder Indian Government reacted the way it did by showing close alignment with Russia and China.

Interestingly, the Russian Crude Order, unlike the Executive Order 14257 of 2 April 2025 (reciprocal tariff order), contained a severability clause in Section 8: "If any provision of this order or the application of any provision of this order to any individual or circumstance is held to be invalid, the remainder of this order and the application of its provisions to any other individuals or circumstances shall not be affected."

The Trump administration was probably doubtful about legality of the order and advised insertion of the severability clause.

More on the issue in another post.