On August 27, 2023, the United States implemented tariffs of up to 50% on imports from India, marking a significant shift in trade relations. This decision, which adds a further 25% tariff on top of an existing 25% levy, primarily targets India's continued purchase of Russian crude oil. While this move aims to pressure India, it creates a lose-lose situation for both nations and inadvertently benefits Russia.
The newly imposed tariffs are among the highest that former President Trump has enacted against any country, and they are unlikely to achieve their intended goal. Instead, they may strengthen India's resolve to continue importing Russian oil. Following the invasion of Ukraine in 2022, India has significantly increased its reliance on Russian crude, which now accounts for approximately 40% of India's oil imports.
In terms of pure economics, India faces a critical decision: whether to endure a 50% tariff on its exports to the United States while maintaining its oil imports from Russia, or to comply with U.S. demands and reduce its Russian purchases. According to data from commodity analysts Kpler, India's imports from Russia reached 1.88 million barrels per day (bpd) in the first half of 2025.
If we consider that Russian oil is priced about $5 cheaper per barrel than alternatives, this could translate into substantial savings. Assuming India purchases an average of 1.9 million bpd, the total annual savings could amount to approximately $3.5 billion. In contrast, India's exports to the U.S. were valued at $87 billion in 2024, with the new tariffs affecting an estimated 55% of this trade. Consequently, the economic loss from the tariffs may outweigh the benefits derived from cheaper Russian oil.
However, the decision to continue buying Russian oil is not merely an economic calculation; it is also heavily influenced by political factors. Indian Prime Minister Narendra Modi may find it politically detrimental to appear submissive to President Trump, which could erode his domestic support. Additionally, India perceives Trump's actions as inconsistent, especially since he allows China to continue its imports of Russian oil.
As the situation develops, there is a real risk that the trade dispute between the U.S. and India could escalate. Trump's tariffs, while intended as a pressure tactic, may ultimately undermine the trade relationship, leaving him with limited options to exert further influence. India, for its part, could leverage its position by strengthening ties with other nations that are also targets of U.S. sanctions, such as Brazil and China.
India's increasing imports of U.S. energy—totaling 234,000 bpd of U.S. crude in the first half of 2025—could also be at risk. With third-quarter estimates already suggesting an increase to 338,000 bpd, losing India as a market would not significantly impact U.S. energy exporters, but it would signal a troubling shift in geopolitics, where strategic alliances could supersede supply and demand fundamentals.
Ultimately, the tariffs imposed by the United States are likely to backfire, pushing India closer to Russia and complicating U.S. foreign relations. While India may experience economic hardships due to these tariffs, the most significant beneficiary appears to be Russian President Vladimir Putin, who continues to profit from oil sales to India while watching the U.S.-India relationship deteriorate.
The opinions expressed in this article are those of the author, a columnist for Reuters, and do not necessarily reflect the views of Reuters News.
