US tariffs on India reach 50% amid rising tensions over Russian oil imports, straining ties and testing India’s strategic balancing act

In Short:

• Threat of US tariffs on India is to pressurise it to turn away from buying Russian oil
• Moving away from Russian oil will cost India billions

Introduction

The former Bolshevik leader and head of the Soviet Union, Vladimir Lenin, once stated that “There are decades when nothing happens, and then there are weeks where decades happen“. The latter part can be aptly rewritten as ‘there are days where decades happen’ based on current development in the US-India trade relationship, especially in the context of recent US tariffs on India.

The US-India relationship now faces its most significant challenge in decades because of the recent developments that began on July 30th, when President Donald Trump announced through Truth Social that he would impose 25% US tariffs on India and additional penalties for Russian oil purchases. This was followed by another 25% tariffs announced by Trump when he signed an executive order on August 6th. So now, the effective tariff on goods imported from India to the US stands at 50%.

Russian Oil and Tariffs

In all three of Donald Trump’s social media posts (till 5th August 2025) regarding the threat of US tariffs on India, the keyword that stands out is ‘Russia’. This is as much of an attack on Russia as it is against India. This comes after months of the US President Trump attempting to end the war in Ukraine. Reports suggest that the summer of 2025 is witnessing some of the heaviest fighting since the escalation of the conflict in February 2022.

The attempts by the US president, who promised to end the war in one day, are clearly failing. The hostilities between the countries have increased, with both Russian and Ukrainian drones hitting deep inside each other’s countries. Russia, which many analysts point out is advancing on the battlefield, has no incentive to stop now until its demands are met. Some of the demands, which include demilitarising Ukraine and recognising the 4 Ukrainian Oblasts as Russian, are unacceptable to Ukraine and its allies.

No End in Sight for Ukraine War

The US President has been giving the Russian President revised deadlines to end the war, with Moscow not moving an inch. The talks between Moscow and Kiev in Istanbul have yielded very few positive results other than a few prisoner exchanges and an agreement for further engagement.

Trump has been annoyed at the Russian and Ukrainian leadership for the slow pace of the talks. This is where talks about further sanctions against Russia, and the targeting of countries that deal with Russia with secondary sanctions come in. With India and China being the leading buyers of Russian oil at a discounted price, secondary sanctions would hit both these countries hard.

High Cost of Russian Oil

Oil from Russia, unlike that from Iran, is not subjected to direct US sanctions (at least not yet). Sanctioning Russian oil would push the global oil prices skyrocketing and lead to inflation and domestic economic fallout, which will be politically damaging. So, the threat of US tariffs on India is to pressurise countries to turn away from buying Russian oil. Instead of sanctioning the Russian oil, Trump’s strategy seems to be to pressurise the countries to look for alternatives, which would strain the Russian finances. This would hopefully put an end to the war.

This strategy of pressure has worked before, with India moving away from Iranian oil in 2019 after the American sanctions against Iranian oil. India seems to be collateral damage in Trump’s efforts to stop the war in Ukraine. A study by Business Standard has suggested that shifting away from Russian oil would cost India around US$ 10 Billion annually. While high Indian tariffs on American goods and Indian trade surplus might have also contributed to the tariff threat, the Russian war can be seen as the elephant in the room and the immediate trigger for the US tariffs on India.

Way Forward for India

India now has to walk a tightrope. This is a challenge unlike any the US-India relationship has faced in decades. Any escalation would affect the good relations both the countries have had in decades. India also has to keep its national security interest in mind and moving away from Russian oil could lead to huge charges for India. India can also use its leverage over Russia to pressure it to stop the fighting and come to a ceasefire agreement with Ukraine. An end to the fighting would bring relief to New Delhi and India should now be actively pursuing this route.

Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.

Adithyan P V

Research Consultant, International Relations at CPPR | [email protected] |  + postsBio

Adithyan Puthen Veettil holds a BA in Economics from Azim Premji University and a Master’s degree in Advanced International Studies from the Vienna School of International Studies. He has previously worked at the UN in Vienna, and his published articles for the Austrian Economics Centre and Polemics Magazine.

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