Trump pledges to boost tariffs on India over Russian oil. Why this may increasingly not deter New Delhi

To purchase or to not purchase… That’s the query India is having to ask after US President Donald Trump has stepped up his assaults towards the nation for its buy of oil from the Vladimir Putin-led nation.

On Monday, the US chief threatened to “considerably” elevate tariffs on items from India over its buy of Russian oil. This got here after Trump has already introduced a 25 per cent tariff on New Delhi together with a “penalty” for getting Russian crude.

Since final week, Trump has taken purpose at India alongside together with his officers, together with Secretary of State Marco Rubio and White Home Deputy Chief of Workers Stephen Miller, questioning India’s buy of Russian oil.

Nonetheless, the query is — will Prime Minister Modi acquiesce to Trump’s calls for and cease shopping for Russian oil? The reply: it appears fairly unlikely, and right here’s why.

Trump’s threats to India on Russian oil

The present stress between India and the US stems from when Donald Trump first introduced that he would slap tariffs of as much as 100 per cent on international locations that purchase Russian oil until Moscow reaches a peace cope with Ukraine by August 7-9.

Then final week,
Trump introduced 25 per cent tariffs on Indian items, citing New Delhi’s levies on US merchandise and purchases of Russian oil and navy tools. Whereas India was “our good friend”, it had at all times purchased most of its navy tools from Russia and was “Russia’s largest purchaser of vitality, together with China, at a time when everybody desires Russia to cease the killing in Ukraine — all issues not good”! Trump posted on his Reality Social platform on July 30.

This was adopted up by
US Secretary of State Marco Rubio stating that the acquisition of Russian crude was a “level of irritation” in US-Indo ties, telling Fox Information that whereas India was an “ally” and “strategic accomplice”, Delhi’s buy of Russian oil was hampering its relationship with Washington.

Then on Sunday (August 3), Trump’s prime aide accused India of financing Russia’s battle in Ukraine by shopping for oil from Moscow. “What he (Trump) stated very clearly is that it’s not acceptable for India to proceed financing this battle by buying the oil from Russia,” stated
Stephen Miller, deputy chief of employees on the White Home and considered one of Trump’s most influential aides, in an interview with Fox Information, including, “Individuals will probably be shocked to be taught that India is principally tied with China in buying Russian oil. That’s an astonishing truth.”

And
Trump himself doubled down on the strain on Monday (August 4) with a contemporary submit on Reality Social, wherein he accused India of shopping for “large quantities” of oil from Russia after which “promoting it on the open marketplace for large income.”

“They don’t care how many individuals in Ukraine are being killed by the Russian battle machine. Due to this, I will probably be considerably elevating the tariff paid by India to the USA,” he stated.

India’s buy of Russian oil

The pressure in India-US ties has additionally to do with oil, particularly
Russian oil. Earlier, India bought most of its oil from West Asia, however this modified after Russia started promoting its oil at discounted charges after the West shunned it as punishment for its full-scale invasion of Ukraine in February 2022.

In reality, an US Power Info Administration report reveals that India elevated its purchases of Russian oil greater than sixfold after the battle broke out. Furthermore, the Worldwide Power Company notes that 70 per cent of Russian crude was exported to India in 2024.

Compiling knowledge, Bloomberg studies that India, on a median, has been shopping for Russian crude at about 1.7 million barrels a day thus far this yr.

India’s stance on Russian oil

On Monday (August 4), just a little after Trump threatened extra tariffs on India,
India responded to the state of affairs, indicating that it wouldn’t cease buying crude and even said that “the focusing on of India is unjustified and unreasonable”.

Ministry of Exterior Affairs spokesperson Randhir Jaiswal in an announcement stated that India has “been focused by the US and the European Union for importing oil from Russia after the graduation of the Ukraine battle”.

He known as out the US and Europe’s double requirements noting that whereas they criticised India, they themselves have been finishing up commerce with Russia. “India’s imports are supposed to guarantee predictable and reasonably priced vitality prices to the Indian shopper. They’re a necessity compelled by world market state of affairs. Nonetheless, it’s revealing that the very nations criticising India are themselves indulging in commerce with Russia. Not like our case, such commerce is just not even a significant nationwide compulsion.

“The European Union in 2024 had a bilateral commerce of €67.5 billion in items with Russia. As well as, it had commerce in providers estimated at €17.2 billion in 2023. That is considerably greater than India’s whole commerce with Russia that yr or subsequently. European imports of LNG in 2024, in actual fact, reached a report 16.5 million tonnes, surpassing the final report of 15.21 million tonnes in 2022.

“Europe-Russia commerce consists of not simply vitality, but additionally fertilisers, mining merchandise, chemical compounds, iron and metal and equipment and transport tools.

“The place the US is anxious, it continues to import from Russia uranium hexafluoride for its nuclear trade, palladium for its EV trade, fertilisers in addition to chemical compounds.”

He additional famous that India started importing from Russia conventional provides have been diverted to Europe after the outbreak of the battle. The USA at the moment actively inspired such imports by India for strengthening world vitality markets stability.

Let the Russian oil movement

Different officers within the Indian administration word that regardless of Trump’s threats, India will proceed its commerce with Russia for a lot of causes.

Firstly, they famous that there was a rising sense throughout the administration that it shouldn’t enable for American policymaking to form its decisions on very important vitality provides for its 1.4 billion folks.

Analysts and officers from the federal government additionally word that if even India suspended its oil commerce with Moscow it wouldn’t assist the US. As Pankaj Saran, a former Indian deputy nationwide safety adviser and ambassador to Moscow, advised the New York Instances, “What we even have to bear in mind is that even when India might minimize to zero, China is just not going to. You’ll have a form of a weird state of affairs the place Russia will promote to China at low cost costs, and so you’d have China being the last word beneficiary.”

Furthermore, Indian specialists word that it was owing to its buy of oil that helped preserve world oil costs in verify. Indians stored the Russian oil flowing on the capped value, serving to to shrink Russia’s income but additionally making certain that world costs would stay in verify.

One supply was quoted as telling the Mint, “Had India not absorbed discounted Russian crude mixed with OPEC manufacturing cuts of 5.86 mb/d, world oil costs might have surged properly past the March 2022 peak of US$137/bbl, intensifying inflationary pressures worldwide.”

In reality, former US ambassador to India Eric Garcetti had lauded New Delhi’s buy of Russian oil in 2024. Within the now broadly circulated video, Garcetti is heard saying, “They (India) purchased Russian oil as a result of we needed anyone to purchase Russian oil at a value cap. That was not a violation or something. It was truly the design of the coverage as a result of, as a commodity, we didn’t need the oil costs going up, and so they fulfilled that.”

“India introduced Russian Oil, as a result of we needed anyone to purchase Russian oil…”, says US ambassador Garcetti on India shopping for Russian oil ; Provides,’no Worth Cap violation, we didn’t need oil costs to go up..’ pic.twitter.com/it3zku9Hbs

— Sidhant Sibal (@sidhant) Might 11, 2024

Specialists additionally famous that India’s contracts are long-term and “it’s not so easy to only cease shopping for in a single day”.

Commerce analysis physique GTRI additionally famous, “India’s oil commerce with Russia has taken place with full transparency and broad understanding with the US. One of many key causes India stepped up Russian oil purchases was to assist stabilise world oil markets after Western sanctions disrupted conventional provide chains.

“By sustaining diversified and reasonably priced vitality entry, India contributed to stopping a worldwide oil value shock. Trump’s determination to boost tariffs on India citing oil commerce is just not solely unjustified — it ignores market realities misrepresents commerce knowledge, and undermines a key strategic partnership within the Indo-Pacific.”

India additionally has to contemplate the worth of shifting away from Russian oil. New Delhi must pay extra if it went with sources of oil like Saudi Arabia, who sells at the next value to Asian international locations due to a coverage known as the “Asian premium” maintained by the Organisation of the Petroleum Exporting International locations (Ospec).

We’ll simply have to attend and watch to see what occurs subsequent — will Trump drop his demand or will India give in.

With inputs from companies