US Tariff on India of 50% Due to Russian Oil: Geopolitical Rift

US Tariffs on India – Political and Economic Fallout

The US imposed 50% tariffs on many Indian goods, effective Wednesday, aiming to punish India for buying Russian oil and pressure it to curb energy transactions that fund Moscow’s war in Ukraine. The move — among the highest tariffs the US has applied to any partner — strains US-India ties, may push India closer to China, and risks heavy damage to Indian exporters (textiles, seafood, jewellery) and jobs. Key exemptions exist (pharmaceuticals, computer chips, smartphones, some steel/aluminium/auto lines) and investigations could produce further duties. New Delhi condemned the action as unfair; analysts warn the tariffs could cut Indian exports sharply and erode long-term trust.

Key points

• 50% tariffs target many Indian products to punish India for buying Russian oil; deadline enforced Wednesday.
• Significant exemptions: pharmaceuticals, computer chips, smartphones and some auto/steel/aluminium items; some sectors under investigation for possible duties.
• Potential hit: exporters (textiles, seafood, jewellery) report cancelled US orders, shifting business to Bangladesh/Vietnam, and risk large job losses.
• Economic impact estimates: Russia supplied <del>36% of India’s crude in 2024; tariffs could cut exports by ~40% (</del>$37bn) in a year per GTRI; India loses about a 7% discount on Russian oil and saved ~$17bn by increasing Russian imports since 2022.
• Political fallout: India calls the move “unfair, unjustified, unreasonable”; the action may drive New Delhi closer to Beijing and erode bilateral trust.

Political Fallout

India’s recent outreach to China — highlighted by Chinese FM Wang Yi’s visit to New Delhi and Modi accepting a meeting with Xi at the SCO summit — is a risky response to a sharp deterioration in U.S.-India ties under the Trump administration. While Washington has imposed tariffs and criticized India’s purchase of Russian oil, New Delhi appears to be seeking to rebalance by thawing relations with Beijing. This is a poor bet: structural rivalry, unresolved Himalayan border disputes, China’s deep ties with Pakistan, and asymmetric power make a durable India–China rapprochement unlikely.

Key points

• Wang Yi’s August visit to New Delhi and Modi’s acceptance of a Xi meeting signal India’s bid to ease tensions with China.
• The pivot was prompted largely by worsening U.S.-India relations: punitive tariffs, criticism over Russian oil purchases, and perceived U.S. unreliability under Trump.
• China quickly reinforced ties with Pakistan after Wang’s India visit (CPEC expansion agreement), underscoring Beijing’s longstanding Pakistan partnership.
• Fundamental obstacles (border disputes, competing visions for regional order, military/economic asymmetry) make a genuine India–China rapprochement unlikely and risky for New Delhi.

Policy implications

• New Delhi should avoid over-reliance on tactical outreach to Beijing as a hedge against U.S. pressure. Short-term diplomatic gestures cannot erase deep strategic distrust and can produce domestic and regional backlash.
• India ought to pursue a diversified strategy: maintain ties with Washington while strengthening relationships with other like-minded democracies in the Indo-Pacific (Japan, Australia, and ASEAN partners) to build a broader balancing network.
• New Delhi must invest in credible defense and border infrastructure along the Himalayan frontier, improve intelligence-sharing with partners, and pursue confidence-building measures with Beijing that are narrowly focused, verifiable, and incremental.
• Economic engagement with China should be carefully calibrated. Selective decoupling in critical technologies, investment screening, and supporting domestic industry can reduce vulnerability without a wholesale severing of trade ties.
• Diplomatic signaling to both the U.S. and China should be clear: India will not be a transactional pawn but a sovereign actor pursuing strategic autonomy. This requires transparent communication of India’s red lines and security priorities to avoid miscalculation.

Strategic Analysis

What caused this rift between the US and India? Experts think that Trump was personally offended by New Delhi’s public statements that he played no role in the India-Pakistan crisis in May. Pakistan on the otdher hand, supported Trump and went so far as to recommend a Nobel Prize for him. Second, the Indian agricultural market is almost closed to foreign competition and some of Trump’s trade negotiators want that to open. However, this will be difficult for Modi to do because of domestic reasons.

Thus, India is looking to balance U.S. power by looking towards Russia, China and other countries. Of course, China would love for this to happen.

The problem for India is that by pursuing a multi-alignment foreign policy such as having ties with both the West, US especially, while keeping ties to Russia and Iran plus the BRICS and SCO is eventually going to be a problem. This balancing act is risky. Under U.S. President Biden this was tolerated due to India’s strategic value, but under Trump the strategy has fallen apart.

The response by Modi was to call Russia and China after the spat. But how will this play out after years of cultivating closer ties with the United States and Quad nations such as Australia and Japan plus Europe. Trust between the US and India has certainly now taken a hit. Hopefully, both countries will seek to repair the damage for long-term strategic reasons.