Will Trump's Tariffs Deter India From Buying Russian Oil?

(BIJU BORO/AFP via Getty Images)

An oil tanker train passes near a refinery in Guwahati, India, on March 30, 2023.

Despite escalating U.S. tariffs, India will likely continue buying Russian oil for affordable energy in the short term, while simultaneously negotiating a trade deal with the United States to protect its broader economic interests. On Aug. 6, U.S. President Donald Trump signed an executive order that places a new 25% tariff on Indian imports, effective Aug. 27, bringing total U.S. tariffs on India to 50%. In justifying the tariff hike, Trump cited India's continued purchases of Russian oil, arguing that these transactions have helped finance Russia's war in Ukraine. The move comes as Trump has repeatedly voiced frustration with Russian President Vladimir Putin over stalled ceasefire negotiations with Ukraine. In response to Trump's tariff announcement, the Indian government stressed its oil purchases were guided by market dynamics and the need to secure energy for its population, and asserted that India will act to defend its national interests. India has also accused the United States and the European Union of hypocrisy for targeting its Russian oil imports while continuing their own trade with Russia. Russia, meanwhile, has accused the United States of applying unlawful trade pressure on India, arguing that countries have the right to choose their own trading partners without interference.

Trump has threatened to impose new sanctions on Russia if it does not make substantial progress on establishing a peace process with Ukraine by Aug. 8. He has also warned that additional countries will be hit with secondary U.S. tariffs if they continue purchasing Russian oil.
Notably, other major importers of Russian oil products were not included in Trump's executive order. This includes China and Turkey, the largest and third-largest buyers of Russian oil, respectively (with India being the second-largest).

The tariffs reflect U.S. frustration with India's robust energy ties with Russia, which have grown significantly since the onset of the war in Ukraine. India is heavily reliant on imported energy to meet the demands of its 1.4 billion citizens, with over 80% of the country's crude oil supplied from sources abroad. Traditionally, the Middle East was India's primary supplier. However, this shifted following Russia's invasion of Ukraine in 2022 and the subsequent Western sanctions on Russian oil, which forced Russia to offer its crude at a significantly discounted rate. Consequently, India has substantially increased its purchases of Russian oil in recent years, seeking a cheaper alternative to meet growing domestic needs. Russia now accounts for approximately 35% of India's imported crude, a significant rise from just 1% before the Ukraine war began in 2022. Despite Western objections, Indian officials have said they intend to keep buying Russian oil, citing energy security concerns and India's deep dependence on imports. In addition, New Delhi has refrained from condemning Russia's actions in Ukraine, instead consistently calling for diplomacy and peaceful resolution.

The Trump administration's move to levy tariffs against India over its purchases of Russian oil signals a shift in U.S. strategy regarding India-Russia ties. For years, Washington had tolerated New Delhi's historically close defense and diplomatic relationship with Moscow to build a strategic partnership with India aimed at counterbalancing China. But it now appears Trump may be willing to put strategy at risk in an effort to increase pressure on Putin.
While India's growing defense ties with Western countries have reduced its reliance on Russian arms, Russia still accounts for 36-38% of India's total arms imports between 2020 and 2024 (compared with 55% between 2015 and 2019, and 72% between 2010 and 2014). In addition, New Delhi has refrained from condemning Russia's actions in Ukraine, instead consistently calling for diplomacy and peaceful resolution.

While the United States and India share strategic interests, Trump has also grown frustrated with New Delhi's trade protections and alignment with BRICS. India and the United States share strategic interests in countering China's growing influence in the Indo-Pacific, working together through forums like the Quad, and in strengthening defense ties via joint military exercises, arms sales and intelligence sharing. However, Trump has increasingly criticized India's protectionist trade policies, arguing they are unfavorable to the United States and vowing to shrink its trade deficit with India. Despite five rounds of trade negotiations amid Trump's ''reciprocal'' tariffs, no agreement has been reached. U.S. officials have expressed frustration over India's unwillingness to open its markets more fully, especially in sectors like agriculture, where protections remain strong due to Modi's efforts to safeguard the large domestic farming community. The Trump administration has also taken issue with India's alignment with BRICS, viewing it as contrary to U.S. interests.

In 2024-25, India ran a $46 billion trade surplus with the United States. In exchange for tariff relief, New Delhi has offered to increase its purchases of U.S. energy to $25 billion from $15 billion, and has also expressed interest in strengthening defense ties, including the potential acquisition of F-35 fighter jets. Additionally, India has proposed eliminating its 6% digital services tax and lowering tariffs on American bourbon, luxury cars and solar products.
Indian Prime Minister Narendra Modi's once-cordial ties with Trump have taken a hit amid the recent disputes over trade, Russian oil and foreign policy. Modi was among the first foreign leaders to visit Trump upon his return to the White House in January, and Trump publicly referred to him as a ''great friend.'' In February, both leaders set a goal to double bilateral trade to $500 billion by 2030.

In the short term, India will likely continue importing Russian oil in the hopes that potential U.S.-Russia negotiations on Ukraine will prompt Trump to roll back his new tariffs. Last year, India exported $86 billion worth of goods to the United States. A sizable share of this export revenue could be at risk if higher tariffs lead to reduced U.S. demand for Indian goods and India fails to divert exports elsewhere. But if India reduces its Russian oil imports to secure tariff relief, its annual import bill could rise by $9-11 billion due to losing a $5-per-barrel discount on the roughly 1.8 million barrels of Russian crude it imports each day, according to estimates from the data and analytical firm Kpler. Moreover, if global oil prices rise further due to reduced Russian supply, the financial impact could be even greater. That said, the impact of U.S. tariffs would still be more costly than the impact of reducing Russian oil imports. However, given the domestic pressure Modi is facing to resist U.S. demands, as well as the hope that the United States and Russia may soon reach an understanding over Ukraine that reduces U.S. tariff pressure, India will likely maintain its current oil imports from Russia, either at the same level or at some reduced volume. According to the Kremlin, Putin may meet with Trump as soon as next week. If the Russian president makes diplomatic gestures during that meeting, such as accepting a temporary ceasefire in Ukraine or agreeing to a meeting with President Volodymyr Zelensky, this might satisfy Trump enough to delay or ease further measures against Russia and its trade partners, including the new tariffs targeting India. India will thus wait to see the outcome of potential U.S.-Russia negotiations before making strategic decisions, and may even leverage U.S. threats to secure further oil discounts from Russia.

During an Aug. 7 meeting between top Russian and Indian officials in Moscow, the two sides affirmed their commitment to a ''strategic partnership,'' underscoring the resilience of India-Russia ties amid mounting Western criticism.

With time before the tariffs take effect, India is still likely to pursue a trade deal with the White House to protect key export industries exposed to the U.S. market. The additional 25% tariff is set to take effect in 21 days, giving India time to absorb the impact or make necessary preparations. India views the delayed implementation as a possible sign that the White House remains open to dialogue. Indeed, a U.S. delegation is expected to arrive in India on Aug. 25 for the next round of trade talks. Although the timing of the trade talks will likely leave India temporarily vulnerable to tariffs, Indian officials believe the country can handle the short-term effects if a comprehensive trade agreement is reached by India's targeted deadline of October. Given that the increased tariffs will put Indian exporters at a 30-35% competitive disadvantage compared to countries like Vietnam, Bangladesh and Japan, particularly in industries like textiles, footwear, and gems and jewelry, India will likely continue to push for a deal in the coming months to avoid further strain on its access to its largest export market. But while India has been actively pushing for a resolution in recent weeks, there is little indication that its chances of securing a favorable deal have improved, and its negotiating position is unlikely to change without a shift in U.S. priorities or political pressure. Additionally, Trump's threat to impose tariffs on Indian pharmaceuticals presents a significant risk, with over 40% of India's drug exports destined for the United States. These potential duties would add to existing tariffs on Indian steel, aluminum and automobiles, further straining trade relations and strengthening India's incentive to reach a comprehensive agreement. However, with Modi reaffirming on Aug. 7 his commitment to protecting India's politically sensitive agricultural sector amid stalled trade talks and potential domestic backlash, major concessions in agriculture remain unlikely, likely constraining and delaying the finalization of a trade deal with the White House, especially if the United States is adamant about India meeting its agricultural demands.

The United States purchased 31% of India's total pharmaceutical exports in 2023-2024. The pharmaceutical industry accounts for approximately 1.72% of India's GDP. Gems and jewelry accounted for 12.8% of all Indian exports to the United States in the fiscal year 2024.

If the United States maintains or increases its tariffs in the coming year, India is more likely to gradually scale back Russian oil imports and diversify suppliers, rather than accept prolonged high tariffs or engage in direct retaliation. If the United States sustains or expands tariffs and further escalates by directly sanctioning Russian oil and energy companies, India would most likely gradually reduce its purchases of Russian oil and seek to diversify its crude sources as part of a compromise with the United States. This would force Indian refiners to rely more on suppliers from the Middle East, Africa and the Americas. However, these alternatives tend to be more expensive and are unlikely to match the low-cost oil India currently receives from Russia. India remains unlikely to retaliate against the U.S. tariffs for fear of escalating tensions with Washington, which could have broader consequences beyond trade, such as curbs on work visas for Indian tech professionals, reduced foreign investment and disruptions to business partnerships. Unlike China, India also lacks significant leverage, such as control over rare earth supplies, that could pressure the Trump administration, meaning its retaliatory measures would be unlikely to influence U.S. policy. In the less likely case that India chooses to continue buying Russian oil, it would likely have to accept living with the high U.S. tariffs. In the medium to long term, this situation would likely drive India to accelerate efforts to finalize free trade agreements with partners like the European Union, Australia, New Zealand and the Gulf Cooperation Council, in order to diversify its trade relationships and lessen its exposure to U.S. tariffs. However, these agreements would take time to finalize and implement, and would likely offer only minor relief, not fully compensating for reduced access to the U.S. market.