India Pushes Back Against US Tariff Threats Over Russian Oil Imports

A 25% tariff puts energy and trade on a collision course

India's purchases of Russian oil have become the centre of a widening dispute with the United States, putting a trade relationship worth $87.4 billion in American imports of Indian goods in 2024 under pressure. As of August 6, 2025, President Donald Trump has announced tariffs of at least 25% on Indian imports and threatened further penalties tied specifically to New Delhi's continued purchases of Russian energy.

The confrontation connects two major Indian economic interests: access to the American market and affordable fuel for 1.4 billion people. India imports about 80% of the oil it needs. Russian crude, sold at a discount, has helped the country contain energy costs since Russia's invasion of Ukraine.

Trump argues that those purchases undermine efforts to isolate Moscow and indirectly finance its war. India rejects the pressure as unjustified and unreasonable, saying its energy decisions reflect necessity and pointing to continued American and European trade with Russia.

The dispute also threatens months of negotiations over a broader trade agreement. Washington has complained about Indian tariffs and restrictions on agriculture and dairy, while New Delhi has sought greater access for its exports without exposing farmers and small businesses to competition they may struggle to withstand.

India, described as the world's fourth largest economy, is therefore confronting pressure on both its imports and exports. More expensive oil could affect costs at home, while higher American tariffs could weaken the appeal of Indian goods in one of their major overseas markets.

Why Trump is targeting Russian oil purchases

Trump has accused India of buying large quantities of discounted Russian crude and then selling much of it on the open market for substantial profits. His argument is that this commercial activity helps sustain Russia's ability to wage war in Ukraine.

The US president set out his accusation and tariff threat in a social media statement:

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.

A tariff is a tax charged when goods enter a country. In this case, the United States would charge the duty on Indian goods entering its market. That can make those products more expensive for American buyers or force businesses to absorb part of the cost through smaller profit margins.

Trump's approach extends beyond taxing trade between the United States and Russia. What he calls secondary tariffs would penalise trade with countries that continue buying Russian energy. The pressure reaches India through its sales to America, even though the activity Washington objects to is India's purchase of oil from Russia.

The proposed measures are among the harshest imposed on any American trading partner in recent years. They also represent a broader use of tariffs for foreign policy purposes, moving beyond traditional financial sanctions aimed at particular transactions, companies or banking relationships.

Trump has coupled the pressure with a demand for Russia to end the war by a hard deadline and a threat of tariffs reaching 100% on countries that keep buying Russian energy. The dispute described on August 6 does not provide the exact deadline or the final size of any additional penalty on India.

India says the pressure applies a double standard

India's Ministry of External Affairs argues that Western countries continue doing business with Russia while criticising New Delhi's oil purchases. Indian officials point to trade involving chemicals, fertilisers, machinery and energy products, including uranium and liquefied natural gas (LNG). LNG is natural gas cooled into liquid form so that it can be transported by ship.

Randhir Jaiswal, spokesperson for the Ministry of External Affairs, said India would defend its economic interests and explained the government's account of why Russian purchases increased:

India will protect its economic interests in the face of threats of steep tariffs from President Donald Trump. The targeting of India is unjustified. Our imports of Russian oil began only after Western countries reduced their own supplies to Europe following the Ukraine war.

Indian officials also argue that traditional suppliers redirected oil to Europe after the invasion, leaving India to seek supplies elsewhere. The ministry presents Russian imports as a necessity for maintaining stable and affordable energy prices, rather than a discretionary purchase that can easily be abandoned.

The ministry cites European Union trade with Russia worth €67.5 billion in 2024, which it says exceeded India's total trade with Russia. That comparison forms part of New Delhi's argument that the burden of economic pressure on Moscow is being applied unevenly.

Washington and New Delhi are approaching the same transactions from different priorities. Trump focuses on the revenue Russia receives and the war it is fighting. Indian officials focus on fuel affordability, supply reliability and the continued Russian trade of countries demanding a change in Indian policy.

How Russia became India's leading oil supplier

Russia became India's leading oil supplier after the Ukraine war began. Indian purchases rose from fewer than 100,000 barrels a day to more than 1.8 million barrels a day in 2023, accounting for nearly 39% of India's total oil imports.

Those figures show how large the change has been. Using the stated thresholds, the later daily volume was more than 18 times the earlier level. A share of nearly 39% also means Russian crude supplied close to four out of every ten barrels India imported.

Discounts help explain the shift. Lower prices for crude, the unprocessed oil that refineries turn into usable fuels, reduce a major input cost for an economy that depends heavily on imports. India has used those savings to help manage inflation and support economic growth.

Indian officials and energy specialists argue that replacing this volume abruptly would be difficult. Iran and Venezuela, two possible suppliers, are themselves subject to US sanctions. Supplies from the Middle East are limited and often more expensive.

India's refineries also connect these purchases to markets beyond its borders. They process Russian crude into refined products that are exported, including to the United States and Europe. Indian officials and energy specialists argue that keeping Russian oil flowing through this system helps restrain global prices.

For consumers, the concern is straightforward: a sudden change in supply could make fuel more expensive. For refiners, the calculation includes the price of replacement crude, the reliability of deliveries and the commercial commitments already attached to existing purchases.

Trade talks now carry the weight of the Ukraine war

American and Indian officials had spent months negotiating over market access before the oil dispute sharpened. Washington wanted India to lower its high tariffs on American goods and open sectors such as agriculture and dairy. New Delhi wanted improved access to the US market while protecting farmers and small businesses.

Those talks had made progress. Trump's decision to connect trade terms with India's relationship with Russia has complicated the negotiations by attaching a foreign policy demand to commercial disagreements.

India now faces pressure to change a major energy relationship as part of managing its American trading relationship. Trump's deadline for ending the Ukraine war and threatened 100% tariffs on buyers of Russian energy leave less room for gradual adjustment or compromise.

The sequence leading to the confrontation spans several years:

• After the Ukraine war began, India increased purchases of discounted Russian crude as international energy trade shifted.
• By 2023, Russian deliveries exceeded 1.8 million barrels a day and represented nearly 39% of India's oil imports.
• In 2024, the United States imported $87.4 billion in Indian goods; the EU's trade with Russia totalled €67.5 billion, according to India's foreign ministry.
• By August 6, 2025, months of US and Indian trade negotiations had become entangled with Trump's tariff announcements and threats over Russian oil.

The commercial disagreements remain relevant alongside the oil dispute. Farmers, smaller businesses, exporters and energy companies face different pressures, making a settlement more complicated than an agreement over a single tariff rate.

Russia ties extend beyond discounted crude

India's relationship with Russia dates back to the Cold War, when the Soviet Union was a primary supplier of arms and diplomatic support. That history gives the present dispute a strategic dimension beyond the price of oil.

India remains Russia's top arms customer, even as it has diversified defence purchases and strengthened relations with the United States and other Western countries. A demand to distance itself from Moscow therefore touches a partnership involving security as well as energy.

New Delhi has condemned civilian casualties in Ukraine and called for the conflict to end. It has nevertheless resisted Western pressure to pull away from Russia, citing its own strategic and economic interests.

India's approach places it between relationships it wants to preserve. Russian supplies support important energy and defence needs, while the United States is a major commercial partner and part of India's expanding cooperation with Western countries.

The dispute has also strained the relationship between Trump and Indian Prime Minister Narendra Modi. Their earlier public displays of friendship now sit alongside a confrontation in which both leaders face criticism at home and internationally.

Tankers and refiners show the immediate strain

At least four tankers carrying Russian crude have been reported idling off India's western coast, with mounting sanctions and uncertainty over future trade rules delaying deliveries. The disruption shows how political pressure can reach cargo movements before a lasting change in national policy is announced.

Indian authorities have reportedly instructed refiners owned by the state to prepare contingency plans and examine alternative suppliers. Producers in the Middle East and West Africa are among the options being considered.

Indian officials insist that there has been no official policy change. Private refiners, including Reliance Industries and Nayara Energy, continue importing Russian oil. Nayara is partly owned by Russia's Rosneft.

Companies owned by the state have temporarily paused purchases as Russian discounts narrow and the market assesses the risk of American penalties. Their decisions reflect both the changing price advantage and uncertainty about the consequences of continuing trade.

A senior Indian official, who was not named, explained why existing supply arrangements could not simply be cancelled overnight:

These are long-term oil contracts. It is not so simple to just stop buying overnight. Our refineries operate in full compliance with international norms, and Russian oil has never been directly sanctioned by the US or EU.

The official's position rests on contracts and the government's understanding of the applicable rules. Refiners must still make practical decisions about deliveries, alternative supplies and costs while the tariff confrontation develops.

Oil prices react to the risk of disrupted supply

Brent crude prices rebounded after reaching a low for the preceding five weeks, as traders weighed the possibility of reduced Indian purchases of Russian oil. Brent is a widely used reference price for crude traded internationally.

The market concern is that a sudden shift in a major buyer's supply arrangements could disrupt the movement of oil and increase demand for alternatives. Indian purchases have helped keep Russian crude in circulation, and replacing them quickly could put pressure on prices elsewhere.

Ashley Kelty, an analyst at Panmure Liberum, said he expected some reduction in purchases but doubted that India would stop entirely:

Expectations appear that India may reduce its buying of Russian crude, but I can't see them doing so entirely as they have been making supernormal profits on buying cheap Russian crude,

Kelty's reference to supernormal profits means earnings above the level normally expected, in this case linked to buying crude at a discount. His assessment points to a commercial reason for refiners to retain Russian supplies even under growing political pressure.

Energy specialists supporting India's position argue that its purchases are legitimate and help maintain stability in the global market. They warn that an abrupt halt could produce a supply shock, push prices higher and hurt consumers beyond India.

Price movements therefore reflect competing expectations: India may cut some purchases to reduce exposure to penalties, but the savings from Russian crude and the difficulty of replacing it give refiners reasons to continue.

Exporters and diplomacy face a broader test

India has become an important alternative for companies moving manufacturing out of China. Electronics, pharmaceuticals and other goods are part of that shift. Higher American tariffs threaten to weaken India's competitive position and could encourage businesses to consider other locations.

Indian exporters face a different problem from oil importers. Their costs may rise at the American border because of energy decisions made elsewhere in the economy. Buyers could seek cheaper suppliers, while Indian businesses may need to accept lower returns to retain orders.

Indian officials are exploring ways to soften the impact, including selling exports in other markets, increasing domestic consumption and finding new energy suppliers. Each response addresses a different part of the dispute, from demand for Indian products to the cost and origin of its fuel.

The United States also faces a diplomatic cost. India is a key partner in the Indo-Pacific, and Washington wants cooperation as it seeks to counter China's influence and maintain its own position in Asia. Pressure intended to weaken Russia risks straining that partnership.

Secondary tariffs could also become a precedent for using access to the American market to influence countries' dealings with third countries. This confrontation illustrates the practical tradeoff: Washington seeks pressure on Moscow, while New Delhi seeks control over decisions it considers essential to its national interests.

As of August 6, the announced tariffs were set to take effect, trade talks had produced no breakthrough, and India showed no sign of abandoning Russian oil abruptly. Officials continued to place energy security and national interests at the centre of their response. Decisions in both capitals could affect exporters, refinery operations and fuel buyers far beyond the two countries.

The Bottom Line

• Trump announced tariffs of at least 25% on Indian imports and threatened additional penalties over Russian oil purchases.
• The United States imported $87.4 billion in Indian goods in 2024, exposing a substantial trading relationship to the dispute.
• India imports about 80% of its oil needs; Russia supplied nearly 39% of its oil imports in 2023.
• New Delhi rejects the pressure as unfair and points to continued US and European trade with Russia.
• At least four tankers were reported delayed off India's western coast, while refiners examined alternatives and assessed risks.
• Private refiners continued Russian purchases, and Indian officials said there had been no official policy change.
• The confrontation has complicated trade negotiations and raised concerns about export competitiveness, fuel prices and US relations with India.