President Donald Trump has hit India with a 50% tariff on its exports to the US, punishing New Delhi for continuing to buy Russian crude. He accuses India of “funding Russia’s war machine” and vows more penalties if Prime Minister Narendra Modi doesn’t halt oil imports from Moscow.This follows Trump’s prior 25% tariff on Indian goods. A bill seeking to levy up to 500% tariffs on any country buying Russian oil is also advancing through Congress.Why it matters
- Trump’s pressure could unravel 25 years of US-India strategic progress – and shift global oil flows toward China.
- India is America’s biggest democratic partner in Asia, a linchpin in the Quad (with Japan and Australia), and a potential counterweight to China’s rise.
- But Trump’s tariff barrage risks alienating New Delhi and pushing it closer to Russia and China – the very actors US policy seeks to isolate.
- The irony? Trump hasn’t penalized China, the largest buyer of Russian crude, which continues to import 2 million barrels/day – roughly the same as India.
- By singling out India, the US hands Beijing a golden opportunity: to snap up discounted Russian oil, grow its energy security, and tighten Eurasian partnerships.
- “India is now in a trap: because of Trump’s pressure, Modi will reduce India’s oil purchases from Russia, but he cannot publicly admit to doing so for fear of looking like he’s surrendering to Trump’s blackmail,” said Ashley Tellis, Carnegie Endowment.
- The target is Russia. The collateral damage is India. And the strategic beneficiary, many analysts agree, is China.
China and India dominate Russian oil imports
The big picture
- India pivoted to Russia in 2022 when the West shunned Moscow’s oil after the Ukraine invasion. Russian crude – particularly the heavy, sulfurous Urals blend – was offered at steep discounts, and India pounced.
- From near-zero in 2021, India now imports nearly 2 million barrels/day from Russia-about 35–40% of its total crude imports, according to the Economist. This move reduced India’s oil import bill, helped keep inflation under control, and made local refiners immensely profitable.
- In a country still reliant on imported energy to power its growth, it wasn’t just shrewd-it was necessary.
- Indian refiners convert it into diesel, jet fuel, and gasoline – then export those products globally at market prices.
- This “arbitrage model” has allowed India to cut its import bill while fueling record-high profits for domestic refiners.
- Until now, Washington and Brussels looked the other way. India’s Russia ties were chalked up to “strategic autonomy.” That tolerance is gone.
- For three years, Western allies turned a blind eye. Now, Trump wants to flip the switch. “The White House is serious about pressuring India to go to zero,” one source told the Economist, suggesting that Washington may not stop at tariffs. It’s already considering cutting off any port, bank, or shipping company that facilitates India’s Russian oil deals from the US financial system.
‘Ready to pay huge price’However, PM Modi has shown no appetite for retreat. At a national agricultural conference in New Delhi on August 7, Modi declared: “India will never compromise on the interests of its farmers, dairy farmers and fishermen… I am ready to personally pay the huge price.” The statement, which was widely interpreted as a response to Trump’s trade demands, reinforces Modi’s unwillingness to be seen as capitulating to Washington.
Trump blind to economic links beyond trade
This isn’t mere bravado. Trump’s tariffs are already biting. According to Bloomberg Economics, if new levies hit Indian electronics and pharmaceuticals-currently temporarily exempt-the impact could slice 1.1% off India’s GDP. India’s $86.5 billion in exports to the U.S. are now at risk, making it one of the most heavily sanctioned major economies in American trade policy-tied only with China.Trump’s unpredictable diplomacy has put even India’s allies in Washington on edge. “We are better off together than apart,” Atul Keshap, a former US diplomat and current head of the US-India Business Council, told The New York Times. “The partnership forged by our elected leaders over the past 25 years is worth preserving.”But that partnership, many fear, is unraveling. And the timing could not be worse.Between the lines: India’s strategic drift toward BeijingModi is now expected to visit China later this month for the Shanghai Cooperation Organization (SCO) summit, his first trip there in seven years. Russian President Vladimir Putin will be in attendance. Chinese foreign minister Wang Yi is reportedly preparing a bilateral agenda for talks between Modi and Xi Jinping.This is not just symbolic diplomacy. Analysts warn that US- India ties are at their lowest point since Washington sanctioned New Delhi for its nuclear tests in 1998. Ashley Tellis of the Carnegie Endowment called it “a needless crisis” driven by Trump’s personal political needs.
Highest rates for ‘BICS’ nations
Meanwhile, Putin has already met Trump’s envoy Steve Witkoff five times this year, including a three-hour meeting just as Trump announced the tariffs. The goal: explore a potential “grand bargain” to end the war in Ukraine. As NYT reported, Trump’s calculus appears clear-force Russia to negotiate by isolating its buyers. But in turning up the heat on India, he risks pushing the world’s largest democracy into tighter alignment with Beijing and Moscow.Indeed, one senior Indian official told Reuters that “India will gradually repair ties with the US,” but is now exploring deeper engagement with Russia, China, and the BRICS bloc.China’s silent coup in the oil market
- As India scrambles to find alternatives to Russian crude, China is doing the opposite: it’s quietly stockpiling.
- Chinese refiners have increased their Russian orders in recent months, according to the Economist, anticipating this exact moment.
- With Indian refiners likely to scale back, the competition for discounted Russian barrels will vanish-and China will reap the benefits.
- “Being less exposed to American sanctions, [Chinese refiners] would also continue to buy Russian crude-at a growing discount,” the Economist noted.
- This is not just about cheaper oil. It’s a geopolitical opening. Beijing is watching two of its regional rivals-Washington and New Delhi-clash, while it quietly tightens its grip on Russia’s most valuable export.
- That, in essence, is Trump’s tariff paradox: in punishing India for its Russian oil ties, he may be making China stronger.
- In Asia Times, Y Tony Yang called it “a troubling paradox,” where “rather than weakening China’s position, the tariffs appear to be generating economic headwinds at home, straining key alliances, and creating new opportunities for Beijing to expand its global influence.”
In trying to punish one friend, Trump may be rewarding two foes.The American costWhile the White House boasts of growing tariff revenues-monthly collections tripled to $29 billion by July 2025, according to Asia Times-the economic consequences are growing. Yale’s Budget Lab estimates that Trump’s tariffs will cost American households an average of $2,400 this year. US GDP growth has slowed to 1.2% in the first half of 2025, down from 2.8% last year.Manufacturing job growth has stalled. In California alone, over 64,000 jobs in trade and logistics are at risk, and the Port of Los Angeles is operating at 70% capacity.At the strategic level, the consequences are graver. Allies like Japan and South Korea were granted tariff relief after tense negotiations. Only India faces the full 50% levy. “It’s not pressure-it’s punishment,” said one South Korean trade analyst, quoted in Asia Times. “It creates space for China.”And China is wasting no time. It’s expanded its Belt and Road infrastructure deals in Africa and Latin America and now leads the global renewable energy race. In 2024, China added 429 gigawatts of new generation capacity-86% from renewables-while America focused on tariff enforcement.A self-inflicted wound
- Trump’s strategy hinges on forcing India’s hand in hopes of ending a war. But it may backfire in another.
- India is not just a buyer of Russian oil; it’s a partner in the Indo-Pacific, a member of the Quad, a bulwark against Chinese regional dominance. Weakening that partnership might win a short-term tactical victory-but at the risk of losing the long game.
- The irony is bitter. Trump once called India’s economy “dead.” But it is the fastest-growing large economy in the world. Alienating it with tariffs while ignoring China’s larger infractions sends a message that US policy is less about fairness and more about favoritism.
- Ajay Srivastava, a former trade official at the Global Trade Research Initiative, a New Delhi-based think tank, told the NYT: “US action “will push India to reconsider its strategic alignment, deepening ties with Russia, China and many other countries.”
(With inputs from agencies)
