A still‑unfolding row began in late July 2025, when on July 30 President Donald Trump took to Truth Social to announce a sweeping 25 percent tariff on all Indian imports to the U.S., adding that further penalties would target India’s ongoing purchase of Russian oil and military equipment. Trump accused India of buying "massive amounts of Russian oil" at a discount and then reselling refined products at a profit, all while allegedly ignoring casualties in Ukraine. He vowed to "substantially" increase tariffs unless India ceased those imports.
New Delhi responded almost immediately. The Ministry of External Affairs declared the U.S. move "unjustified and unreasonable," stressing that India’s energy sourcing was driven by the need to keep domestic prices affordable, not political alignment with Moscow. Officials pointed out the double standard: the U.S. and EU themselves continued to buy Russian commodities like uranium, palladium, chemicals, and fertilizers, often at much higher volumes than India ever had. As India’s foreign minister noted in diplomatic forums, energy decisions hinge on economic stability and supply security, not geopolitical pandering.
The scale of India’s Russian oil imports was striking. By mid‑2025 about 35–40 percent of India’s crude came from Russia, down somewhat from peaks of roughly 45 percent earlier in the year but still constituting a significant reliance on Moscow amid western sanctions. Reality, some analysts note, was more nuanced: while Trump spoke of resale profits, India does export refined fuels, but crude exports are banned, so crude and processed fuel flows are hard to trace cleanly.
As the rhetoric intensified, Trump’s trade advisors backed an even more draconian proposal, the Sanctioning Russia Act of 2025, envisioning tariffs of up to 500 percent on imports from nations continuing to buy Russian energy, with India and China top targets. Yet Trump pushed for discretion, seeking authority to waive or delay tariffs if diplomacy required it selectively.
Inside India, import volumes began to taper in response. Refiners, especially the state-owned ones, started to reduce contracts with Russian suppliers even before new U.S. measures would take effect. July tanker tracking data showed a 24 percent drop in Russia‑to‑India oil deliveries versus June, and crude’s share in the import basket was down to around 34 percent.
Economically, the tariffs risked more than oil disruption. The 25 percent duty hit vast swaths of Indian exports, textiles, gems, pharmaceuticals, and auto parts. Analysts estimated India’s export revenue might fall by up to $18 billion annually, and domestic inflation could rise by $11 billion in energy costs alone. But while such numbers are eye-catching, GDP impact might remain modest. Nomura projects a mere 0.2 percent hit to India’s expected 6.2 percent growth rate for the financial year.
Yet the oil tiff only underscored larger strategic fissures. Washington’s aggressive stance toward India contrasted sharply with Trump’s overtures to Pakistan, including an announcement of a major oil deal and mediation offers over Kashmir, moves viewed by New Delhi as deeply unsettling and provocative. India, for its part, reaffirmed its longstanding strategic autonomy, balancing relations between Russia, the U.S., and others as part of a broader multipolar vision.
The narrative that unfolded was as much about prestige as policy. Trump cast India as ungrateful and morally negligent, sharpening his rhetoric about Indian tariffs being among the highest in the world, and calling India’s economy “dead” along with Russia’s. Indian officials bristled: Piyush Goyal and others emphasized India’s trajectory toward becoming the world's third‑largest economy and insisted New Delhi would not rush into a "bad deal" merely to placate U.S. demands.
Amid this escalating showdown, global stakeholders watched nervously. For the U.S., the oil‑pressure tactic aligned with its desire to weaken Russia’s war economy and assert American energy dominance globally, but it also risked alienating a crucial strategic partner in Asia. For India, the move threatened export jobs, fuel prices, and growth momentum, but also tested its diplomatic resolve and economic independence.
In the end, what began as a commercial dispute over discounted Russian crude morphed into a high‑stakes geopolitical duel. Oil, after all, is not just a commodity; it’s a lever, a signal, a negotiation tool. In this case, it revealed fissures in a friendship once ceremonially lauded by Trump and Modi, and exposed the fragility in global energy interdependence. Whether either side can step back from the tariff brink without long-term harm remains uncertain, and that tension is what now defines the U.S.–India relationship in mid-2025.
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