Trump to raise tariffs on India over Russian oil trade, warns of higher penalties

Tensions between Washington and New Delhi have escalated as US President Donald Trump announced a sharp increase in tariffs on Indian imports, citing India’s continued purchases of Russian oil.

The decision comes just days ahead of an August 8 deadline for Russia to agree to a truce with Ukraine, and amid broader US threats of secondary sanctions against countries trading in Russian energy.

Trump targets India over Russian oil resale

President Trump’s announcement, made via a post on Truth Social, accused India of profiting from its purchase of discounted Russian oil while ignoring the ongoing war in Ukraine.

Trump asserted that India has been reselling Russian oil on the global market “for big profits,” undermining international efforts to pressure Moscow economically.

While Trump did not reveal the full scope of the new trade penalties, he previously suggested a 25% tariff rate on Indian goods.

Additionally, unspecified penalties are also under consideration. The latest move marks one of Trump’s strongest trade measures against India since his return to office.

These proposed tariffs are part of a broader US strategy to curb Russian revenue from energy exports.

The US and its allies argue that purchases of Russian oil help fund President Vladimir Putin’s war efforts in Ukraine, which is now in its fourth year.

By threatening secondary sanctions, Washington is aiming to dissuade countries from engaging in such trade.

India remains firm on energy policy

Despite mounting pressure, India has remained resolute in its stance on Russian oil imports.

Prime Minister Narendra Modi has not issued directives to halt purchases, and Indian officials have indicated that there is no plan to revise the country’s energy strategy.

India’s decision to buy Russian oil is driven by both economic and strategic interests.

Since the start of the conflict in Ukraine in 2022, India has significantly increased its imports of Russian crude, attracted by the discounted rates.

So far this year, India has purchased around 1.7 million barrels per day of Russian oil, according to tanker tracking data from Bloomberg.

India’s exports of refined fuels, including diesel, gasoline, and blending components, reached about 8 million barrels per day in the first half of the year.

While it is difficult to quantify how much of this is refined from Russian crude, analysts say the scale of exports underscores India’s growing role in global fuel markets.

Trade frictions add to diplomatic tensions

Trade relations between the US and India are increasingly strained.

Trump has recently criticized India for its tariffs, regulatory barriers, and participation in the BRICS group, particularly over discussions of alternatives to the US dollar.

These concerns are compounded by a US trade deficit with India of approximately $43 billion in 2024, making it the 11th-largest such imbalance globally.

While India has signaled interest in continuing trade talks and potentially increasing imports of US natural gas, communication equipment, and gold, significant hurdles remain.

Modi’s government has resisted opening sensitive sectors like agriculture and dairy, citing religious sensitivities and food safety concerns.

The broader geopolitical backdrop is also evolving. Trump’s frustration with Russian President Putin has grown as diplomatic efforts to end the war have stalled.

A special envoy, Steve Witkoff, is expected to visit Moscow this week for further negotiations.

However, the US president’s move to increase tariffs on India adds a layer of complexity to both the Ukraine conflict and US-India economic relations.