New York/Washington, Aug 4:
In a fresh trade threat against India, President Donald Trump on Monday said he will “substantially” raise US tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits.
Last week, the Trump administration slapped a 25 per cent duty on all Indian goods. The US president also announced a penalty for buying “vast majority” of Russian military equipment and crude oil, but no mention was made in the notification.
“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,” Trump said in a social media post on Monday.
“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,” he added.
In its reaction, India said it will take all necessary steps to safeguard and promote national interest and that the implications of the tariffs are being examined.
India’s import of crude oil from Russia has risen from 0.2 per cent of total purchases before the Russia-Ukraine war to 35-40 per cent. New Delhi is the largest buyer of Russian oil after China.
On August 1, Trump signed an Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, raising tariffs for over five dozen countries, including a steep 25 per cent for India.
The executive order, however, did not mention the “penalty” that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.
White House Deputy Chief of Staff Stephen Miller, in an interview to Fox News Sunday, stated that President Trump has said very clearly that “it is not acceptable for India to continue financing” the Ukraine war by purchasing oil from Russia.
Last week, Trump mounted a sharp attack on India and Russia for their close ties and said the two countries can take their “dead economies down together”, a remark which prompted New Delhi to say that India is the world’s fastest-growing major economy.
Declaring that the US has a massive trade deficit with India, Trump had said that while “India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country.
“Also, 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 — All things not good!” Trump had said.
These announcements are being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed trade agreement with India. The US is seeking duty concessions for its agriculture, dairy and genetically modified (GM) foods. India is against giving any concessions in these sectors as they involve the livelihood of millions of small and marginalised farmers.
New Delhi has said that it is studying the implications of these tariffs and is still hopeful of concluding a fair, balanced and mutually beneficial trade agreement.
So far five rounds of negotiations have been held between the two countries. For the next round of talks, the US team is coming to India on August 25. The talks will go on till August 29.
India historically bought most of its oil from the Middle East, including Iraq and Saudi Arabia. However, things changed when Russia invaded Ukraine in February 2022.
India, the world’s third-largest crude importer after China and the US, began snapping up Russian oil that was available at a discount after some in the West shunned it as a means to punish Moscow for its invasion of Ukraine.
From a market share of just 0.2 per cent in India’s import basket before the start of the Russia-Ukraine conflict, Russia overtook Iraq and Saudi Arabia to become India’s No.1 supplier, with a share as high as 40 per cent at one point of time.
In July, Russia supplied 36 per cent of all crude oil, which is converted into fuels like petrol and diesel, that India imported.
During 2021-25, the US was India’s largest trading partner. The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
With America, India had a trade surplus (the difference between imports and exports) of USD 35.32 billion in goods in 2023-24. It was USD 41 billion in 2024-25 and USD 27.7 billion in 2022-23.
In 2024-25, bilateral trade between India and the US reached USD 186 billion. India exported USD 86.5 billion in goods while importing USD 45.3 billion.
In services, India exported an estimated USD 28.7 billion and imported USD 25.5 billion, adding a USD 3.2 billion surplus. Altogether, India ran a total trade surplus of about USD 44.4 billion with the US.
In 2024, India’s main exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), vehicle and auto components (USD 2.8 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton, including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion). (PTI)
