Amidst the ongoing conflict in Ukraine, former U.S. President Donald Trump has threatened India with "substantial" tariff hikes for continuing to purchase Russian oil. Trump argues that India's purchases are funding the "Russian War Machine" and demonstrate a disregard for the lives lost in Ukraine.
In a post on his social media platform, Truth Social, Trump stated, "India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don't care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA".
This threat follows Trump's recent imposition of a 25% tariff on Indian goods, adding another layer of complexity to the trade relationship between the two countries. While Trump did not specify the exact increase in tariffs, he previously suggested implementing 100% tariffs on countries conducting oil business with Moscow unless a peace treaty with Ukraine is established.
India has strongly responded to Trump's threat, calling the accusations "unjustified and unreasonable". India's Ministry of External Affairs (MEA) has defended the country's energy policy, stating that its oil imports from Russia are driven by the necessity to ensure affordable energy costs for Indian consumers amidst global market disruptions. The MEA also pointed out that the U.S. and European Union continue to trade with Russia, including in sectors like energy, uranium, palladium and fertilizers, highlighting what it views as a double standard.
India has become a major importer of Russian oil since the start of the Ukraine war in 2022, taking advantage of discounted prices offered due to Western sanctions. Before the war, Russian oil accounted for a small percentage of India's total crude imports. However, as traditional suppliers diverted exports to Europe, India increased its Russian oil imports to approximately 40% of its total. This has made India the second-largest buyer of Russian oil after China. In the fiscal year 2023-24, India's purchases of Russian oil grew to around $140 billion.
Despite the U.S. and EU pressure, India has maintained that it will continue to safeguard its economic interests and secure affordable energy supplies. Indian officials have emphasized that the country's energy needs are a priority, and it will continue to make decisions based on "price, grade of crude, inventories, logistics and other economic factors".
Some experts suggest that Trump's claims about India reselling Russian oil for profit are misleading. While some Indian refineries may export refined products to Europe, it doesn't necessarily mean they are profiting from reselling Russian crude. Also, India says that at the start of the full-scale invasion of Ukraine, the U.S. had encouraged India to import Russian gas "for strengthening global energy markets stability".
The potential tariff hike and India's firm stance highlight the complex geopolitical landscape and the challenges countries face in balancing economic interests with international pressure. The situation remains dynamic, with the possibility of further developments as the conflict in Ukraine continues and the August 8th deadline approaches that Trump has pressed Russian President Vladimir Putin to agree to a ceasefire by.
