Now, US President Donald Trump is sending a very different message, in no uncertain terms. His analysis points to the risks of higher trade sanctions against India due to its large imports of crude oil from Russia. By 2025, India has been importing over 1 billion barrels of crude oil. Strikingly, Russia has provided the lion’s share — a remarkable 37% of these imports.
India’s dependence on Russian crude oil has made Russia India’s largest supplier. But even as global geopolitical tensions spur cooperation with India, the United States government has been closely monitoring India’s energy partnerships. President Trump’s warning signals a potential shift in trade relations, specifically targeting India’s ongoing purchases of Russian oil.
The status quo remains that India is currently subject to a 25% tariff on all of its exports to the United States. If the new tariffs go into effect, they would be piled on top of this high rate. Such an increase would have a historic impact on bilateral trade between both countries. It would be a huge blow to India’s economy as it tries to grow its energy mix to meet increasing global demand for energy.
As the United States has had to worry for decades about countries deepening closer ties with Moscow, especially in the area of hydrocarbons. Against this backdrop, India’s growing reliance on Russian crude oil represents a significant test for American foreign policy. Supporting U.S. administration’s goals to reduce Russian global influence – Trade tariffs are an essential instrument of the administration’s strategy to push Russia back.
To address this great tariff threat, Indian officials have been exploring their possible course of action. Their shoulders are burdened with weighing their countries energy demands against possible economic fallout, most notably sanctions, from the US. There will be debate over efforts to diversify India’s oil imports, so as not to rely on any one supplier, especially if it includes Russia.
As the deal is implemented and as the story continues to develop, both the U.S. and Indian governments are presented with a tangled mess of diplomatic and economic interests. The result of these ongoing tariff negotiations will probably affect US trade policy and relations around the world during the next several months.