What Trump’s threat to tariff Russia’s trade partners means for India

Oil tanker trucks sit outside an oil refinery operated by Bharat Petroleum Corp. Ltd. in Mumbai, India. Dhiraj Singh/Bloomberg via Getty Images hide caption

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Dhiraj Singh/Bloomberg via Getty Images

NEW DELHI — President Trump has announced new tariffs on India, but warned India there is more to come as punishment for buying fuel and weapons from Russia.

World

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The United States will impose 25% tariffs on Indian goods starting in August, Trump said on social media on Wednesday. Also, he added, “they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE.” He said there will be “a penalty” for that.

Earlier this month, Trump warned Russia to stop its war in Ukraine or else its trading partners would be hit with 100% “secondary tariffs.” That came as U.S. lawmakers have been working on a bill that would allow an even tougher punishment of up to 500% tariffs.

India is now the biggest customer of Russian crude oil by volume, according to data from Finland-based think tank the Centre for Research on Energy and Clean Air. China remains the biggest buyer in terms of dollar amount.

Here is a look at how the threats could affect India, a major U.S. partner with one of Asia’s largest economies.

“Double standards” or negotiating tactic?

President Trump’s threat against Russia and its trade partners has been met with defiance in New Delhi. Last week, Indian Foreign Secretary Vikram Misri said there were “double standards” in Trump’s threats to punish Russia’s trade partners. Misri did not elaborate, but it could be a reference to members of the European Union and others that continue to import fuel from Russia directly or indirectly.

Indian Foreign Secretary Vikram Misri speaks during a press briefing in New Delhi on May 10. Arun Sankar/AFP via Getty Images hide caption

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Arun Sankar/AFP via Getty Images

Yet analysts say India may not have much leverage. India enjoys a trade surplus with the U.S., which is India’s biggest export market. Plus, a similar U.S. threat has worked in the past: During Trump’s first presidency in 2019, India stopped importing oil from Iran after Trump imposed sanctions on Tehran over its nuclear program.

The threats to Moscow’s trading partners might not cripple the Russian economy as the U.S. hopes, says Matt Gertken, chief geopolitical strategist at BCA Research, a U.S.-based investment research firm. After previous Western sanctions on Moscow over its war in Ukraine, he says, Russia created a “shadow fleet” of tankers — essentially third-party intermediaries — to deliver oil to its importers.

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Gertken says Trump’s secondary tariff threat is likely a negotiating tactic in the short term. And to avoid blowback, India is likely to capitulate — and could try to procure oil from the shadow fleet, as Bloomberg reports it has done in the past.

“After the initial statements of defiance, there will be business interests in India that would say, ‘well, wouldn’t it be better if we partly enforce these sanctions, got reprieve from the U.S. and negotiated a trade deal,’ ” Gertken says. “And then later we could deal with any issues that remain about not fully enforcing or not enforcing to the true spirit those Russian sanctions.”

India’s imports of Russia’s crude oil goes back decades

India increased imports as Russia offered oil at a discounted price after the Kremlin’s full-scale invasion of Ukraine in 2022. Today, more than a third of the crude oil India imports is from Moscow. But as India’s petroleum minister, Hardeep Singh Puri, recently pointed out, it also imports from nearly 40 other countries. “I’m not worried at all,” Puri said, referring to Trump’s threat to impose secondary tariffs. “If something happens, we will deal with it.”

Hardeep Singh Puri, India’s oil minister, during the India Energy Week conference in New Delhi on Feb. 11. Anindito Mukherjee/Bloomberg via Getty Images hide caption

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Anindito Mukherjee/Bloomberg via Getty Images

The real damage, then, will be to the diplomatic ties between India and the U.S., says Anupam Manur, professor of economics at The Takshashila Institution, a Bengaluru-based think tank and public policy school.

“There was always a section of Indian society which said that the U.S. is India’s best and most natural ally,” Manur says. “But increasingly, the U.S. keeps threatening India with sanctions where they are not aligned with India’s interests.”