MUMBAI, India — The United States has recently doubled tariffs on numerous Indian-origin goods entering the country, raising them to a staggering 50%.
This significant increase has drawn attention not only because it affects India’s exports but also due to the geopolitical ramifications of the U.S. decision.
The Trump administration justifies this tariff hike as a punitive measure against India for its financial dealings surrounding the Ukraine war, particularly its status as a major buyer of discounted Russian crude oil.
In a recent interview on Bloomberg Television, White House trade adviser Peter Navarro accused Indian Prime Minister Narendra Modi of financing what he termed the Kremlin’s “war machine,” labeling the Russia-Ukraine conflict as “Modi’s war.”
Despite this, it’s important to note that a majority of the crude oil imported by India is intended for domestic use, although Indian refineries do export oil products as well.
An analysis conducted by NPR highlighted that the U.S. has become one of the largest markets for these Indian oil exports in recent months.
From January to July of this year, the U.S. imported oil products worth an estimated $1.4 billion from India, according to data from the Finnish think tank Centre for Research on Energy and Clean Air (CREA).
The data indicates that over 90% of the Indian oil products coming into the U.S. originated from the Reliance Industries refinery, owned by Mukesh Ambani, Asia’s richest man.
Significantly, this refinery sources nearly half of its crude oil from Russia.
Thus, U.S. purchases of oil products could be indirectly financing Russian operations, as pointed out by Isaac Levi, a researcher at CREA.
Levi has emphasized the need for the U.S. to impose restrictions similar to those of the European Union, which recently imposed a ban on imports of seaborne crude oil and refined products from Russia in order to curb financial flows to the Kremlin’s military endeavors.
Interestingly, while countries around the globe import oil products from Russia, India is currently the only nation facing such harsh penalties.
In stark contrast, China has significantly ramped up its purchases of Russian crude, importing over $4 billion worth in July alone, and yet it has faced no such sanctions.
Indian Foreign Minister S. Jaishankar has criticized the U.S. for singling out India, suggesting that larger trading partners with Russia deserved greater scrutiny.
In response to U.S. pressure, India has maintained a defiant stance, asserting that it will continue to import oil from whichever country provides the most favorable terms.
Moreover, India is reportedly working on improving relations with China after years of heightened tensions stemming from border disputes.
Recently, the Chinese ambassador in India conveyed a supportive message, stating that silence serves only to empower aggressors.
Despite India’s strong public stance against the tariffs, shipping data analyzed by CREA shows a decrease in oil imports from Russia following Trump’s tariff threats.
Trump has publicly threatened such tariffs for months, going so far as to issue an ultimatum in mid-July demanding a ceasefire from Moscow or facing secondary tariffs.
As of July, approximately one-third of India’s oil imports were sourced from Russia, with average daily imports declining by 24% compared to June. Although imports slightly rebounded in August, they only increased by 5% relative to July.
Some analysts, however, caution against attributing these fluctuations solely to Trump’s threats.
According to Lydia Powell, an analyst with New Delhi’s Observer Research Foundation, around 60% of the crude oil imported by India falls under long-term contractual agreements, making immediate disengagement from Russian oil unlikely.
She also notes that the decline in July’s imports could have been due to refineries opting to source oil from market areas where they could secure better prices.
Powell remarked that while political dynamics play a role in these decisions, economic considerations significantly influence oil procurement choices.
A senior official from Bharat Petroleum Corp. acknowledged in Indian media that diminishing discounts on Russian crude could be a factor contributing to lower import volumes during July.
As the U.S. tariff deadline approached, Russia declared a new 5% discount on oil imports for India, which Powell deemed “significant”—yet she emphasized the need for ongoing monitoring of procurement data for a clearer picture of the situation.
Most analysts concur that even if India opts to reduce its reliance on Russian oil, complete disengagement is virtually impossible due to the sheer volume of Russian exports.
Energy expert Amit Bhandari from the Mumbai-based think tank Gateway House noted that Russia continues to export around 7.5 million barrels of oil daily.
Consequently, the global oil market lacks sufficient spare capacity to absorb the loss of Russian oil without significant price increases.
Bhandari warns that slashing imports of Russian oil could lead to skyrocketing prices that impact consumers worldwide, including in the U.S., where prices could soar back to $150 per barrel—a figure more than double current global oil prices.
Moreover, Ajay Srivastava, the founder of the Global Trade Research Initiative based in New Delhi, suggests that the U.S. tariffs on Indian goods may be part of a strategy aimed at negotiating a better trade deal between the two nations.
Trade discussions between the U.S. and India have stalled since July, largely due to India’s resistance to opening its dairy and agricultural markets to American businesses.
As the largest export market for India, the new 50% tariff is poised to heavily impact labor-intensive sectors such as textiles, jewelry, seafood, and automobiles.
Although the U.S. has implemented tariff exemptions on certain Indian medicines and electronics, American companies and consumers purchasing items like shrimp, clothing, and spices from India can now expect to pay significantly more.
Overall, analysts predict that the most significant casualty of President Trump’s tariffs could be the goodwill built between India and the United States over the years, given the historical context of U.S. support for India’s regional rivals like Pakistan.
In the eyes of Srivastava, Trump’s actions could reshape perceptions for today’s youth in India, imparting the message that trust in the U.S. is fragile at best.
image source from：npr
