U.S. Tariff Hike Sparks Tensions, India Defends Russian Oil Imports
New Delhi, September 4, 2025 — The United States’ imposition of a 50% tariff on Indian goods, citing India’s continued imports of Russian crude oil, has escalated tensions between Washington and New Delhi, threatening bilateral trade ties and global supply chains. India’s Ministry of External Affairs (MEA) has strongly condemned the move as “unfair, unjustified, and unreasonable,” defending its oil purchases as critical to ensuring energy security for its 1.4 billion citizens. The punitive tariffs, which doubled from an initial 25% levy imposed earlier in August, have sparked a diplomatic and economic standoff, with India accusing the U.S. of double standards while signaling plans to deepen trade ties with other global partners.
Background of the Tariff Hike
On August 6, 2025, U.S. President Donald Trump issued an executive order imposing an additional 25% tariff on Indian imports, bringing the total to 50%, as a penalty for India’s reliance on discounted Russian oil. The White House justified the move by claiming that India’s purchases indirectly fund Russia’s war in Ukraine, with Trump stating on CNBC’s Squawk Box that India is “fueling the Russian war machine.” The tariffs, effective from August 27, 2025, target over $48 billion of India’s $87.3 billion in annual goods exports to the U.S., making India one of the highest-taxed U.S. trading partners alongside Brazil.
The decision marks a sharp departure from the previously warm relationship between Trump and Indian Prime Minister Narendra Modi, who met in Washington earlier in 2025 to discuss a potential trade deal. Analysts note that the tariffs reflect Trump’s broader trade policy, which includes sweeping levies on allies and rivals alike to reduce the U.S. trade deficit and bolster domestic manufacturing. However, India’s refusal to halt Russian oil imports has put it in the crosshairs of this strategy.
India’s Defense of Russian Oil Imports
India, the world’s third-largest oil consumer, has significantly increased its imports of Russian crude since the 2022 invasion of Ukraine, with Russian oil accounting for nearly 40% of its total oil purchases in 2024, up from just 0.2% before the conflict. According to commodity data platform Kpler, India imported 1.88 million barrels per day (bpd) of Russian oil in the first half of 2025, benefiting from discounts of up to $7 per barrel compared to global benchmarks. This shift has saved India an estimated $17 billion since 2022, helping stabilize domestic fuel prices and support its energy-intensive economy.
India’s MEA has defended these purchases as driven by “market factors” and the need to ensure affordable energy for its population. In a statement on August 4, 2025, the ministry called the U.S. tariffs “extremely unfortunate,” noting that other countries, including China and the European Union, continue to trade with Russia without facing similar penalties. External Affairs Minister S. Jaishankar accused the West of hypocrisy, stating, “It’s funny to have people who work for a pro-business American administration accusing other people of doing business.” He highlighted that Europe’s trade with Russia far exceeds India’s, with the U.S. itself importing Russian uranium, palladium, and fertilizers.
On September 3, 2025, India’s foreign secretary reiterated the country’s commitment to strategic autonomy, signaling that New Delhi would not bow to U.S. pressure. “Our imports are meant to ensure predictable and affordable energy costs for the Indian consumer,” the official said, adding that halting Russian oil imports could triple global crude prices to $200 per barrel, disrupting India’s supply chain and driving up domestic fuel costs.
Economic and Political Fallout
The 50% tariff is expected to severely impact Indian exporters, particularly in labor-intensive sectors like textiles, gems, jewelry, leather, and marine products, which employ millions. A report by the Global Trade Research Initiative (GTRI) estimates that the tariffs could slash India’s exports to the U.S. by over 40%, or $37 billion, in the current fiscal year, potentially dragging GDP growth below 6% from the Reserve Bank of India’s 6.5% forecast. Tamil Nadu’s textile hub in Tiruppur, which accounts for ₹3,000 crore in U.S.-bound exports, faces significant job losses, prompting Chief Minister MK Stalin to demand urgent relief from the central government.
Politically, the tariffs have strained U.S.-India relations, described by analysts as reaching their lowest point in decades. Former Indian diplomat Rakesh Sood remarked, “Trump loves tariffs and the Nobel Peace Prize… We’ve not given him comfort on the Nobel, so I guess we are facing the tariffs.” India has signaled potential retaliation, with reports indicating that New Delhi may halt purchases of U.S. energy, including 338,000 bpd of crude oil and 11.51 million tons of coal imported in the first half of 2025. The government is also considering relief measures like interest subsidies and loan guarantees for exporters to cushion the blow.
Global Reactions and Strategic Shifts
The tariffs have drawn international attention, with Russia and China slamming the U.S. for exerting “illegal trade pressure.” Kremlin spokesperson Dmitry Peskov defended India’s right to choose its trade partners, stating, “Sovereign countries should have the right to economic cooperation without external coercion.” Russia’s Chargé d’Affaires in India, Roman Babushkin, suggested that India could redirect exports to Russia if U.S. markets become unviable, highlighting deepening ties within the BRICS framework.
China, the largest importer of Russian oil at 109 million tonnes in 2024, has escaped similar tariffs, prompting accusations of selective enforcement. U.S. Treasury Secretary Scott Bessent defended the decision, noting that China’s oil purchases increased only marginally from 13% to 16% since the Ukraine war, compared to India’s sharp rise. However, analysts like Alicia Garcia Herrero of Natixis argue that China’s economic leverage, particularly in critical metals and rare earths, may explain the U.S.’s leniency.
India’s response includes exploring alternative trade alignments. PM Modi’s upcoming visit to China for the Shanghai Cooperation Organisation (SCO) summit, his first since the 2020 Galwan clashes, signals a potential recalibration of ties with Beijing. Indian officials have also held virtual talks with the U.S. on trade and energy security, expressing openness to increasing U.S. energy purchases but reluctance to fully halt Russian imports due to economic and political constraints.
Domestic and Economic Implications
The tariffs pose a challenge to India’s “Atmanirbhar Bharat” (Self-Reliant India) mission, potentially eroding manufacturing competitiveness. Moody’s Ratings estimates a 0.3% GDP growth reduction due to the trade disruption. Indian refiners, expecting a 10–20% increase in Russian oil imports in September 2025 (150,000–300,000 bpd), argue that alternative suppliers like Iraq or Saudi Arabia cannot match Russia’s discounts or compatibility with India’s refineries, such as the Jamnagar facility operated by Reliance Group.
Public sentiment on X reflects frustration, with users like @MumbaichaDon noting India’s counterargument that the U.S. could stop buying Indian refined oil if it objects to the trade. Others, like @Indian_Analyzer, praised India’s defiance, framing it as a stand for sovereignty. However, exporters like Rakesh Mehra of the Confederation of Indian Textile Industry called the tariffs a “huge setback,” warning that a 50% rate renders many shipments commercially unviable.
Path Forward
Despite the tensions, both sides have left room for dialogue. A senior Indian official told Reuters that the 21-day implementation period for the tariffs signals U.S. openness to negotiations. U.S. Treasury Secretary Bessent struck an optimistic note, saying, “India is the world’s largest democracy, and the U.S. is the world’s largest economy. At the end of the day, we will come together.” India, meanwhile, is exploring phased reductions in Russian oil imports and diversifying suppliers, though a complete halt remains unlikely due to economic and diplomatic considerations.
As the trade war looms, India’s strategic balancing act—maintaining ties with Russia, exploring options with China, and negotiating with the U.S.—will shape its response. The outcome of these efforts will determine whether the U.S.-India relationship, once bolstered by personal rapport between Modi and Trump, can weather this storm or face further deterioration.
Sources: The Guardian,
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