Trump Threatens Major Tariff Hike on India Over Russian Oil Trade

Why in the News?

On August 4, 2025, U.S. President Donald Trump declared plans to “substantially raise tariffs” on imports from India, citing New Delhi’s continued purchase and resale of Russian oil as the primary justification. Trump accused India of profiting from the conflict while ignoring the humanitarian crisis in Ukraine.

In a statement posted on his social media platform Truth Social, Trump accused India of profiting from the conflict at the cost of Ukrainian lives. “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,” Trump wrote.

The move follows a 25 per cent base tariff that the Trump administration re-imposed on Indian imports on August 1, alongside an unspecified “penalty” linked to India’s purchase of Russian oil and military equipment. Trump’s latest remarks suggest these measures could escalate significantly if India continues its current oil trade practices.

India-Russia Relations: The Oil Story

India has become one of the largest buyers of Russian crude oil since the start of the Ukraine war in 2022. The country refines much of this oil into fuel products like diesel and jet fuel and then exports them to global markets, including Europe and the United States. By taking advantage of steep discounts from Russia, India has boosted its energy security and gained financially, even as Western nations enforce sanctions.

Senior Trump advisor Stephen Miller added fuel to the criticism, stating, “India now imports as much or more Russian oil than China. They are financing the Russian war machine with no accountability.”

Estimates suggest Russian oil accounts for 35 to 40 per cent of India’s total crude imports. While some state-owned refiners have paused new purchases due to the uncertainty surrounding U.S. penalties, major private refiners like Reliance Industries and Nayara Energy continue to import Russian crude in large volumes.

Diplomatic and Economic Fallout

Trump’s tariff threat comes at a delicate moment for the United States and India’s relations. Over the past few years, the two countries have strengthened cooperation in defence, technology, and climate initiatives. However, this growing partnership could be strained by a new wave of trade penalties.

Experts warn that increased tariffs may hit key Indian export sectors such as textiles, pharmaceuticals, auto components, and electronics. These industries rely heavily on the United States as a major market. Some believe the penalties could reach up to 50 or even 100 per cent, depending on the product.

The threat also puts ongoing trade negotiations between the two countries in jeopardy. Talks about a possible trade agreement had gained momentum under the Biden administration to reduce long-standing trade barriers.

India’s Ministry of External Affairs has not yet issued an official response. However, officials told Reuters that India will continue to make decisions based on its strategic and economic interests and that its energy purchases are fully legal and aligned with national policy.