India, US to Lose from Trump Tariffs as Russia Wins: Russell
The severe tariffs, among the highest Trump has imposed on imports from any country, are unlikely to deliver what he wants, and may actually make New Delhi more determined to keep buying Russian oil
(The views expressed here are those of the author, a columnist for Reuters)
LAUNCESTON, Australia - The United States imposed tariffs of up to 50% on imports of goods from India on Wednesday in a move that is a textbook example of a lose-lose situation for both countries, but perversely is a win for the intended target, Russia.
The additional 25% tariff on top of an existing 25% levy on Indian goods imposed by U.S. President Donald Trump is ostensibly because India keeps buying Russian crude oil.
The severe tariffs, among the highest Trump has imposed on imports from any country, are unlikely to deliver what he wants, and may actually make New Delhi more determined to keep buying Russian oil.
India has increasingly turned to Russian crude after the 2022 invasion of Ukraine led Western buyers to end purchases, with Russian oil rising to about 40% of India's imports.
That reliance has helped hold crude prices lower by keeping Russian oil on the global market, which would have been much tighter from a supply perspective if Moscow had been unable to sell its crude.
In turn India's refiners have also benefited as they have been able to source Russian crude at prices lower than competing grades from other suppliers in the Middle East and Africa.
The question is whether it is better for India to face 50% tariffs on its exports to the United States and keep buying Russian oil, or whether it would be more sensible to bend to Trump's will and cut back imports from Russia to a level acceptable to the U.S. leader.
On a strict economic basis it would probably make far more sense to give in to Trump.
India's imports from Russia were 1.88 million barrels per day (bpd) in the first half of 2025, according to data compiled by commodity analysts Kpler.
For the purposes of a back-of-the-envelope calculation, let's assume that Russian oil is $5 a barrel cheaper than what Indian refiners would pay for alternative grades.
This is actually probably more generous than what Indian refiners actually get, given the current discount between Russia's Urals crude , the main grade India buys, and global benchmark Brent futures is $3.66 a barrel.
But if a $5 discount is assumed and India buys an average of around 1.9 million bpd it means refiners save about $3.5 billion a year by purchasing Russian oil.
India's exports of goods to the United States were worth $87 billion in 2024, and the new tariffs are estimated by exporter groups to affect about 55% of this.
Since the 50% rate is high enough to end much of the trade, India is likely giving up far more economically in losing access to the U.S. market than it gains from buying Russian oil.
POLITICS TO THE FOREFRONT
But the decision to keep buying Russian oil is likely to be made with politics in mind, rather than economics.
It will be hard for Indian Prime Minister Narendra Modi to be seen to be bending the knee to a bullying Trump, since it would lose him political capital at home.
India is also likely to see Trump's actions as inconsistent, because the U.S. leader seems happy for China to keep buying Russian oil.
That is perhaps a sign that Beijing has greater leverage over its trade relationship with the United States, stemming from its dominance in production of refined critical metals and rare earths.
The real risk is that the dispute between the world's biggest and fifth-largest economies escalates.
The problem for Trump is that tariffs are largely a one-and-done type of pressure. Once adopted and raised to a level that destroys the trade relationship, they lose leverage.
This means that if the tariffs do not work and India keeps buying Russian oil, Trump will have to work out new ways to pressure New Delhi.
India is also able to exert some pressure of its own, as from a political standpoint it can draw closer to other U.S. targets, such as Brazil and China.
It can halt all purchases of U.S. energy, which have been rising in recent months.
India imported 234,000 bpd of U.S. crude in the first half of 2025, and third-quarter imports are already estimated at 338,000 bpd by Kpler.
India also imported 11.51 million tons of U.S. coal in the first half of 2025 and 1.22 million tons of liquefied natural gas (LNG).
While losing India as a market will not be enough to hurt U.S. energy exporters, it would be a sign that geopolitics risks becoming more important in energy markets than supply and demand fundamentals.
Overall, Trump's tariffs on India risk having the opposite effect of what he intended, with the side consequence of driving a country that had been something of an ally into the arms of U.S. opponents.
India risks losing economically from the tariffs and also may face further action from the United States.
The only real winner is Russian President Vladimir Putin, who keeps selling oil to India and has the added bonus of seeing the relationship between the United States and India crumble, a factor that works in his favour.
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The views expressed here are those of the author, a columnist for Reuters.
(Editing by Clarence Fernandez)