US Threatens Tariff Hike Over India's Russian Oil Trade, New Delhi Hits Back
US President Donald Trump threatened to “substantially” raise tariffs on Indian goods, accusing New Delhi of profiting from Russian oil and “fuelling the war machine.” In a sharp rebuttal, India’s Ministry of External Affairs called the targeting “unjustified and unreasonable,” pointing out that the US and EU also continue significant trade with Russia. India stated it began importing Russian oil after traditional supplies were diverted to Europe, a move initially encouraged by the US to stabilise global energy markets.
Unpacked:
India increased imports of discounted Russian oil after Western sanctions on Moscow in 2022. As the EU banned seaborne Russian oil, traditional suppliers diverted exports to Europe, making Russian crude both available and cheaper for India, which helped contain its energy costs and inflation.
While the US and EU imposed direct bans on Russian oil, loopholes remain: Europe imports refined Russian oil products from third countries like India. The US increased oil exports to Europe but lost Indian market share as India turned to Russian crude.
US tariffs and penalties could raise India’s annual oil import bill by $9–11 billion if India is forced to reduce Russian crude imports, potentially increasing domestic fuel prices and inflation.
The US, G7, and EU imposed price caps, banned Russian oil imports, and sanctioned Russian oil companies and shipping. These steps aim to reduce Russia’s energy revenues but have led to complex global trade route shifts and enforcement challenges.