Amidst ongoing trade discussions, US President Donald Trump has issued a warning to India, stating that the United States could increase tariffs if India does not reduce its imports of Russian oil. Speaking to reporters on Air Force One on Sunday, Trump emphasized the importance of India aligning with Washington's demands regarding Russian oil purchases.

Trump's statement follows months of trade negotiations between the two countries, which have remained inconclusive. Last year, the U.S. already doubled import tariffs on Indian goods to 50% as a consequence for India's significant intake of Russian oil. Of this, 25% is directly linked to India's continued purchase of Russian oil. Despite these existing tariffs, Indian exports to the U.S. saw a rise in November.

The Indian markets have reacted to the news, with the information technology stock index experiencing a fall of approximately 2.5% on Monday, reflecting investor concerns about the potential strain on trade relations and its impact on a future U.S.-India trade agreement.

Republican Senator Lindsey Graham, a close ally of Trump, echoed the President's sentiment, asserting that the current U.S. sanctions on Russian oil companies and tariffs on India have contributed to a decrease in Indian oil imports. Graham is advocating for legislation that could impose tariffs as high as 500% on countries, including India, that continue to purchase Russian oil. He argues that buying Russian oil supports Russia's war efforts and that increased tariffs would present a "hard choice" for these countries. Graham stated that Trump's actions were the primary reason India was now buying "substantially less Russian oil".

India has been asking refiners for weekly disclosures of Russian and U.S. oil purchases, and experts expect Russian crude imports to dip below 1 million barrels per day as New Delhi seeks to clinch a trade deal with Washington. Since February of last year, India and the U.S. have been engaged in talks aimed at securing a trade deal.

Trade experts, however, caution that India's careful approach might weaken its position. Ajay Srivastava, founder of the trade think tank Global Trade Research Initiative, noted that Indian exports already face a 50% U.S. tariff, with a portion of it tied to Russian crude oil purchases.

India's Commerce Ministry has not yet released a statement regarding the potential for increased tariffs. The situation remains fluid as India navigates its energy needs, geopolitical pressures, and trade relations with both the United States and Russia. How New Delhi balances energy security, trade negotiations, and relations with both Washington and Moscow will shape the trajectory of tariffs and broader bilateral ties.