U.S. President Trump shaking hands with Indian Prime Minister Modi (AP)

U.S. President Trump recently announced that due to India's continued import of Russian oil, he will raise the tariff on goods imported from India to 50%, marking a substantive advancement in the use of tariffs for political purposes.

Trump's move aims to pressure Russia to achieve a solution to the Ukraine crisis. The Ukraine crisis erupted in February 2022 and has had significant impacts on the global economy and European security issues.

Despite sanctions from the United States and Europe, oil exports remain an important resource for Russia to manage its financial situation. It is estimated that by the end of 2024, Russia's oil exports amounted to approximately $192 billion.

Trump is exerting direct and indirect economic pressure on Russia and is punishing India for importing Russian oil. At the same time, the U.S. and Russia are negotiating to end the Ukraine crisis.

Trump previously threatened countries importing oil from Russia and Iran - recently, U.S. Treasury Secretary Scott Bensons stated that negotiations with China may include provisions requiring China to stop importing Russian and Iranian oil on grounds of national security.

India responded several days after Trump decided to delay India's plan to purchase American weapons and aircraft. For India, which heavily relies on American weapon technology, this is not an easy decision.

The difficulty for India in abandoning U.S. arms sales lies in the fact that as an alternative, Russia is under economic sanctions, and turning to China would be even more difficult - given the hostile history between China and India, especially after India's defeat in 1962.

Is Trump's decision to increase tariffs on Indian products a final decision or will it be subject to negotiation in the coming days? Will India accept Trump's conditions to stop or reduce imports of Russian oil? Or will the long-standing strategic relationship between the two countries be disrupted in the future because of Trump's decision?

Economic Relations

The relationship between India and the United States is broad and diverse, classified as a strategic relationship, and the main reason is that India is a neighbor of the United States' major competitor, China. According to data published by the United States, India ranks ninth among the top 15 trading partners of the United States for goods.

According to official data released by the United States, the value of goods trade between the U.S. and India reached $78.35 billion from January to June 2025, with India exporting $56.3 billion to the U.S. and importing about $22 billion from the U.S. The trade between the U.S. and India resulted in a trade surplus of about $34.2 billion for India.

In 2024, the value of goods trade between the U.S. and India reached $128.8 billion, with India exporting $87.3 billion to the U.S. and importing $41.5 billion from the U.S. In 2024, the trade between the two countries brought India a trade surplus of about $45.8 billion.

According to the U.S. Department of State's "U.S.-India Bilateral Relations" report released in January this year, the value of goods and services trade between the two countries was approximately $189.9 billion in 2023, with India exporting $120 billion to the U.S. and importing about $69.9 billion from the U.S.

Notably, in addition to the trade surplus generated from goods trade, India also had a trade surplus in services in 2023 (approximately $6 billion at the time).

However, we should not get bogged down in absolute numbers. India's Silicon Valley project depends to some extent on U.S. investment, even if these U.S. investors come from India. Some of the revenue from India's software and service exports also flows to the U.S.

India's Import of Russian Oil

Data from the U.S. Energy Information Administration, based in Washington, shows that during the period from 2022 to January 2025, India ranked among the largest importers of Russian oil, accounting for about 37% of Russia's total exports.

Regarding India's import of Russian coal, the agency estimates that during the same period, India ranked second in the world for Russian coal imports, accounting for 18% of Russia's total coal exports.

India, like other countries such as China, Turkey, and the EU, directly benefits from the import of Russian and Iranian oil, which constitutes what is known as the "cheap oil strategy." Due to sanctions imposed by the United States and the EU, Russia and Iran sell their oil at lower prices to improve their domestic financial situations.

India's enthusiasm for importing cheap oil provides India with a financial opportunity to reduce product costs and enhance service facilities, and to take advantage of the price difference between international markets and bilateral agreements with Russia and Iran. This enables Indian products to compete domestically and internationally with lower production costs.

The Future of Bilateral Relations

Assessing the process of relations between countries cannot be accomplished solely through comparing numbers. Instead, it is a complex calculation of interests, especially in cases like the relationship between India and the United States. India's economic growth over the past 40 years has benefited from its relationship with the United States, particularly its integration into the globalized process led by the United States.

The achievements of India in the technological and digital revolution have also been realized within the framework of cooperation with the United States. Although India has contributed its outstanding human resources to this field, it would not have achieved its current status without the permission of the United States to transfer technology.

Merely considering trade aspects, India may be forced to give up importing oil from Russia and even Iran to maintain its share in the trade of U.S. goods and services, which amounts to about $19 billion annually.

However, India might have the opportunity to adapt to Trump's decision, especially given that Trump's tariff decisions often involve other countries - whether for commercial or political reasons, although some countries have already reached agreements with Trump to reduce the tariffs imposed on them, such as Japan, the EU, and the UK.

If India continues to import Russian oil and accepts the cancellation of tariffs on its exports of goods to the U.S., this would lead to a decline in trade activities between the two countries, which would negatively impact India's trade and economy and cause an increase in unemployment, a reduction in shipping and transportation activities, unless India seeks other sources to shift its trade affected by tariffs from the U.S. to other regions.

If the U.S. and Russia succeed in negotiations to end the war in Ukraine, this would provide an exit for India, at which point India could request the U.S. to restore the tariffs on Indian goods to previous levels. This would also enable India to smoothly import Russian oil.

Regardless of the degree of differences between the U.S. and India, the bilateral trade volume will not drop to zero. In 2024, India's global goods trade reached approximately $442 billion, and India's exports of goods to the U.S. accounted for 20% of that. This is undoubtedly a considerable proportion, and it is difficult to completely abandon such a large market as the U.S. - all countries desire to participate and benefit from it. Therefore, it is expected that the issue of tariffs on Indian goods by the U.S. will be limited to bilateral relations between the two countries and will not escalate into a crisis.

Sources: Al Jazeera

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