Amidst ongoing concerns regarding India's purchase of Russian oil, former U.S. President Donald Trump has indicated a potential shift in trade relations between the United States and India. Trump stated that the U.S. might consider lifting the 25% tariffs imposed on India if the country curtails its oil imports from Russia.
This announcement follows President Trump's recent executive order that levied an additional 25% tariff on goods imported from India as a consequence of India's continued procurement of Russian oil. This move effectively doubled the tariff rate on Indian goods to 50%. New Delhi has called the additional tariffs "unfortunate".
Trump had previously threatened to penalize India for acquiring a significant portion of its military equipment and fuel from Russia, particularly amidst the conflict in Ukraine. He expressed his disapproval of India's actions, stating that he would substantially increase tariffs due to New Delhi's purchase and resale of Russian oil in the open market for substantial profits.
In response, India's Ministry of External Affairs has stated that nations criticizing India are "themselves indulging in trade with Russia". New Delhi has also asserted that the targeting of India by Washington and the European Union for importing oil from Russia is "unjustified and unreasonable".
The imposition of tariffs has raised concerns about its impact on Indian oil companies, specifically Reliance Industries and Nayara Energy. These companies may encounter challenges related to crude oil imports and refined fuel exports. While there is no official directive from the Indian government to cease purchasing Russian crude oil, these companies may need to explore alternative export markets for refined fuel products. Nayara Energy has already reduced its refinery operations and is offering petrol and diesel to state-run refiners.
The international benchmark Brent crude was trading at $67.97 per barrel, up 0.74%, while American benchmark West Texas Intermediate (WTI) crude rose 0.72% to $65.04 per barrel. These price fluctuations reflect the market's sensitivity to geopolitical developments and potential shifts in supply dynamics.
Trump's special envoy, Steve Witkoff, has been dispatched to Moscow to discuss the Russia-Ukraine war. This visit occurs as Trump threatens extensive new sanctions on Russia, potentially including 100% tariffs and secondary measures against its trade partners, should there be a lack of tangible progress in resolving the conflict. A deadline of August 8th has been set for Russia to agree to a ceasefire deal with Ukraine.
The situation remains fluid, with the potential for negotiations and further developments that could influence the trade relationship between the U.S. and India.
