President Donald Trump is set to substantially increase tariffs on India due to its ongoing purchases of discounted Russian oil, following a previous warning issued in July.
President Donald Trump has announced plans to significantly raise the tariff rate on India, reflecting his disapproval of the country’s continued engagement in purchasing oil from Russia. Trump’s move comes after his earlier threat in July, when he criticized Indian officials for seeming indifference to the casualties in Ukraine due to the Russian military actions.
While the precise new tariff rate remains unspecified, Trump previously intimated the possibility of imposing 100% tariffs on nations conducting oil transactions with Moscow unless a peace treaty is agreed upon with Ukraine. This action stems from India’s role as Russia’s largest buyer of seaborne crude oil, a fact noted by Reuters. Recently, India’s major oil refiners temporarily ceased purchasing Russian oil following Trump’s tariff warnings, yet India has stopped short of completely severing its long-term agreements with Russia.
Indian Energy Minister Hardeep Singh Puri, in an interview with CNBC last July, highlighted that buying Russian oil has contributed to stabilizing global prices. He remarked that the U.S. had advised India to continue such purchases, albeit within sanctioned price caps.
The allure of discounted Russian oil for India is significant, with Russia offering reduced rates in the wake of Western sanctions following its 2022 invasion of Ukraine. The European Union’s price cap of $60 per barrel on Russian oil has made it a more attractive option than Brent Crude, which trades higher at $68.84 as of Monday afternoon.
By purchasing cheaper Russian oil, India can refine some for its domestic needs while exporting the surplus, thus profiting from international sales. This affordability is crucial as India’s energy demands grow rapidly, according to the International Energy Agency. India remains steadfast in its dealings with Russia, with Foreign Ministry spokesperson Randhir Jaiswal referring to the relationship as a “steady and time-tested partnership” with The Guardian.
Should India decide to pivot away from Russian oil, it could escalate imports from Iraq and Saudi Arabia—countries that were its primary suppliers before the shift towards Russian oil. Saudi Arabia and Russia have historically battled over competitive oil prices and production rates, intensifying the strain on Russia’s wartime economy.
Seventy percent of Russian crude was exported to India last year, the International Energy Agency reports, underscoring the magnitude of their oil trade relationship.
Background tensions arise as Trump expresses mounting frustration with Russia’s approach to Ukraine and India’s engagement with Russian oil. Using Truth Social, Trump stated last week, “I don’t care what India does with Russia. They can take their dead economies down together, for all I care.” In a broader context, he accuses India of implementing the most arduous and non-monetary trade barriers worldwide.
Unless a peace agreement in the ongoing Russia-Ukraine conflict is brokered by August 8, Trump has vowed to follow through on threats to impose 100% “secondary” tariffs on Russia. Such measures would have further implications for trade partners like China and India, supplementing a series of Western sanctions already targeting Russia.