Trump says US will impose 'substantially' increased tariff on India over Russian oil

US President Donald Trump said the US government would "substantially" raise its tariff rate on Indian exports to the US in response to what Trump called India's "massive" purchases of crude oil from Russia.

"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 posted on Truth Social. "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."

The tariff rates and a potential deadline for India to respond were not made clear. The White House did not immediately respond to a request for comment. The US administration had previously set a tariff rate of 25% for imports from India while the two sides attempt to negotiate a trade agreement

In a statement published on X, India's Ministry of External Affairs said it had been "targeted" by the US and European Union despite both continuing some aspects of trade with Russia, and that its crude oil trade was a "vital national compulsion."

"The targeting of India is unjustified and unreasonable," the statement said. "Like any major economy, India will take all necessary measures to safeguard its national interests and economic security."

Trump's comments came amid escalating tensions with Russia over the war in Ukraine, and in advance of an Aug. 8 deadline he set for Russia to make a peace deal with Ukraine. Trump has threatened secondary sanctions and secondary tariffs on purchasers of Russian crude supplies if no deal is reached.

India, China and Turkey are the largest importers of Russian crude. In July, India received 1.6 million b/d, China received nearly 1 million b/d and Turkey received around 500,000 b/d, according to S&P Global Commodities at Sea data to date.

On Aug. 1, Trump deployed nuclear submarines in response to what he called "highly provocative statements" by former Russian President Dmitri Medvedev.

"Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances," Trump said in an Aug. 1 Truth Social post.

"We approach any statements related to nuclear issues with great caution," Russian government spokesperson Dmitry Peskov told reporters Aug. 4, the Kremlin's first response to Trump's announcement. "Russia is firmly committed to nuclear non-proliferation, and we believe that all parties should exercise the utmost restraint when it comes to nuclear rhetoric."

Price impacts, supply shifts

Attempts to significantly halt India's purchases of Russian crude oil could run aground against market dynamics, experts have told Platts, part of S&P Global Energy.

David Goldwyn, president of Goldwyn Global Strategies, told Platts that secondary sanctions or tariffs that stop China and India from buying Russian oil could remove 4 million b/d of oil from the market and send crude prices north of $100/b. If such a measure were imposed on India alone, it could still raise prices between $28/b and $40/b, he estimated, running counter to Trump's oft-stated emphasis on lowering energy prices for US consumers.

"The lack of detail, and Trump's own questioning whether economic pressure would lead to Russian policy change, makes me skeptical of big moves that would shake the oil markets," Rachel Ziemba, senior advisor at Horizon Engage, told Platts Aug. 1.

Early Aug. 4, Platts reported that Indian refiners are slowing Russian import deals and attempting to diversify supplies as they seek clarity on potential tariffs and sanctions. Refiners and analysts told Platts that while they had been given the freedom to purchase crude based on commercial viability, many had begun to take a more cautious approach.

"Given the scale of Russian imports, a swift unwind in Russian crude shipments to India is unlikely, despite increasing political pressure from the US. But if it happens, the shift will likely lead to a resurgence of Middle Eastern suppliers such as Iraq, Saudi Arabia, and the UAE, and potentially some increase in light crude imports from the US," said Benjamin Tang, head of liquid bulk at S&P Global Commodities at Sea.