US-India Trade Tensions Escalate as Trump Aide Blames India for Ukraine War
Relations between the US and India have soured following Washington's imposition of 50% tariffs on certain Indian goods. White House trade adviser Peter Navarro intensified the friction by labelling the Ukraine conflict "Modi's war," linking it to India's purchase of discounted Russian oil. While Indian officials hope to resume trade talks, they maintain that energy imports are a matter of national interest. The tariffs are projected to significantly impact India's exports and GDP growth.
Unpacked:
The US imposed 50% tariffs in response to India’s continued purchase of discounted Russian oil, which Washington views as undermining Western sanctions against Russia following its invasion of Ukraine. US officials hope the tariffs will pressure India to reduce economic ties with Russia.
By mid-2024, Russian oil met nearly 40% of India’s crude requirements, making Russia one of the largest suppliers. Indian refiners have relied on Russian oil due to its lower price compared to other sources, helping India manage its energy costs.
The tariffs are projected to significantly impact India's exports to the US, a major trading partner, potentially slowing GDP growth. The real economic effects will depend on how quickly Indian exporters can find alternative markets or adapt to the higher trade barriers.
Indian officials have maintained that energy security is a matter of national interest and continue to import Russian oil despite US pressure. They have called for diplomatic dialogue to resolve trade tensions but show little sign of reducing Russian oil purchases.