Trump’s Tariff Strategy: India’s Oil Dilemma and the Path to Peace in Ukraine

By Francesco Stipo
Thursday, 02 October 2025 03:34 PM EDT

In August, the Trump administration raised U.S. tariffs on India’s goods to 50%. India purchases almost 40% of its crude oil from Russia, a shift that has significantly impacted global energy dynamics. Since the war in Ukraine began, India substantially increased its oil imports from Russia, leveraging discounts to offset American and European sanctions. Before these discounts, India sourced most of its crude oil from the Middle East, primarily Iraq and Saudi Arabia. However, after the conflict in Ukraine escalated, India’s oil imports from Russia surged from 0.2% to nearly 40%, making Russia the top supplier. This trade has generated substantial revenues that indirectly support Russian military operations in Ukraine.

India’s refineries are selling petroleum products to Europe and Africa at high profit margins, further complicating the geopolitical landscape. President Trump has long advocated for a peace deal between Russia and Ukraine, but India’s continued reliance on Russian oil undermines these efforts. Critics have accused him of being overly aligned with Russian President Vladimir Putin, arguing that direct U.S.-Russia negotiations are inappropriate. However, the tariffs on Indian goods suggest otherwise, as they aim to curb Russia’s primary revenue stream, pressuring Moscow to seek a balanced peace agreement in Ukraine.

India faces a critical decision: either Prime Minister Narendra Modi reduces oil imports from Russia and aligns with Western allies or risks long-term economic stagnation. With its population surpassing China’s and projected economic growth outpacing the nation’s, India cannot sustain this trajectory without Western collaboration. The U.S. remains a major export market for India, with trade reaching nearly $80 billion in 2024. Additionally, remittances from Indian expatriates to their families contribute significantly to the economy. Restrictions on H1B visas could hinder this flow, further straining India’s financial stability.

While Russia’s oil discounts have diminished, U.S. crude and liquefied natural gas now offer a competitive alternative for India’s energy needs. The tariffs on Indian goods are eroding the economic benefits of Russian oil purchases. Diversifying energy sources could reduce these tariffs, boosting India’s economy and strengthening U.S.-India trade relations. If Modi opts to cut Russian oil imports in line with Trump’s demands, it would align with India’s long-term economic interests. Conversely, maintaining ties with Russia risks positioning the country against global trends.