India Defies U.S. Tariffs, Deepens Russia Oil Ties Amid Trade Standoff

India has reaffirmed its commitment to safeguarding national interests amid escalating trade tensions with the United States, despite the imposition of steep new tariffs on its exports. The additional U.S. tariffs—up to 50%—are set to apply to Indian goods due to New Delhi's increased purchases of discounted Russian oil. A 25% tariff was already enforced on August 7, and an additional 25% will be imposed starting August 27. These measures come amid stalled bilateral trade negotiations that collapsed earlier this year, primarily over India’s reluctance to open its agricultural and dairy markets to U.S. imports. Bilateral trade between India and the U.S. exceeds $190 billion annually [1].

Indian Foreign Minister Subrahmanyam Jaishankar emphasized that New Delhi is prepared to defend its “redlines,” particularly concerning the interests of farmers and small producers. He underscored that India has a right to act in its national interest and has historically maintained a pragmatic approach to international trade. Jaishankar also pointed out the inconsistency in U.S. policy by highlighting that other major Russian oil buyers, such as China and the European Union, have not faced similar punitive measures. He further noted that prior trade discussions with the U.S. had not addressed the issue of Indian oil purchases from Russia [2].

Analysts have warned that the full imposition of the U.S. tariffs could reduce India’s economic growth by 0.8 percentage points in both 2025 and 2026. Long-term implications could include a diminished reputation as a global manufacturing hub, according to a report by Capital Economics [1]. In response, Indian Commerce Minister Piyush Goyal expressed confidence in the resilience of Indian businesses, stating that companies have developed contingency strategies and expect to outperform previous performance benchmarks. The government is evaluating measures to strengthen trade relations with other partners to mitigate the impact of the U.S. tariffs [3].

U.S. Treasury Secretary Scott Bessent defended the punitive measures, criticizing India for what he called "Indian arbitrage"—importing low-cost Russian oil and reselling refined products at a premium. He estimated that India had earned $16 billion in surplus profits from this activity, disproportionately benefiting wealthy domestic stakeholders. Bessent also noted that China, despite being the largest buyer of Russian oil, has not been targeted with the same tariffs, attributing this to its pre-existing trade ties with Moscow and a more diversified oil supply chain [5]. Indian officials, however, dismissed these arguments as hypocritical, emphasizing that other nations, including the U.S. and EU, also trade with Russia without being compelled by necessity [4].

The situation has also strained diplomatic relations, with Indian leaders describing U.S. foreign policy under President Donald Trump as “unusual” due to its highly public and aggressive tone. Jaishankar stated that India and the U.S. maintain open communication channels despite their current disagreements and that broader aspects of the relationship remain strong. Meanwhile, India and Russia have pledged to deepen trade and strategic cooperation, with India importing 1.6 million barrels of Russian oil per day in the first half of 2025—up from 50,000 barrels per day in 2020. Analysts suggest that these growing ties might further solidify India’s partnership with Moscow, regardless of U.S. pressure [6].

As the global economic landscape continues to shift, India is navigating a delicate balancing act between protecting domestic industries and maintaining international trade relationships. The government is exploring alternative strategies to bolster its position in the global market while ensuring the interests of its core sectors remain intact. The evolving dynamics between India, the U.S., and Russia will likely shape the trajectory of global energy and trade policies in the months to come [4].

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[1] title1 (https://www.cnbc.com/2025/08/23/india-says-us-trade-negotiations-are-still-going-on-as-fresh-tariffs-loom.html)

[2] title2 (https://www.reuters.com/world/china/india-says-us-trade-negotiations-are-still-going-fresh-tariffs-loom-2025-08-23/)

[3] title3 (https://timesofindia.indiatimes.com/business/india-business/funny-that-pro-business-administration-accusing-indias-clear-message-to-us-on-buying-russian-crude-oil-trade-deal-ahead-of-trumps-50-tariffs/articleshow/123471910.cms)

[4] title4 (https://www.easterneye.biz/india-us-trade-tariffs-russian-oil-peter-navarro-china/)

[5] title6 (https://www.benzinga.com/markets/macro-economic-events/25/08/47233926/scott-bessent-clarifies-why-trump-penalized-india-not-china-over-russian-oil-purchase-indian-arbitrage-unacceptable)

[6] title7 (https://www.cnbc.com/2025/08/22/india-defies-us-tariffs-to-boost-russia-trade-putin-modi-trump.html)