President Donald Trump has signed an executive order hitting one of Vladimir Putin’s key sources of revenue with devastating 25% tariffs. India has been accused of continuing to support Russia’s war machine by buying up Moscow’s oil.
But at the White House on Wednesday, President Trump went after Russia’s economy by slapping India with the huge penalty effective in 21 days if it continues to buy Russian fossil fuels. The new import taxes could put the combined tariffs on Indian goods at 50%. Putin has relied on cash generated from selling natural resources to countries like India, which have not adhered to international sanctions imposed since the illegal invasion of Ukraine began in February 2022. Falling revenue from oil sales could spell disaster for the Russian economy, and the Kremlin’s ability to fund the war in Ukraine. In July, money for Moscow from oil sales fell by a massive 27%. Russia’s balance sheet is already looking bad, as corporate debt has spiralled to $446 billion (£334 billion).
On Tuesday, Trump said he would soon raise tariffs on India “very substantially” over its continued purchase of Russian oil, a decision criticised by New Delhi and Moscow. The US president also told reporters that declining energy prices could pressure Putin to halt the war in Ukraine.
The executive order read: “I find that the Government of India is currently directly or indirectly importing Russian Federation oil.
“Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent.”
India, the world’s most populous country, has a huge demand for energy and Russia, with its vast natural resources, has been a key provider of fuel. In response to the announcement today on tariffs , the Indian Foreign Ministry branded the move “unfair, unjustified and unreasonable”.
A statement from the ministry said: “We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India.”
As well as hitting Russia’s economy hard, Trump’s move also could reshape India’s economic ambitions.
Many American companies have seen India as an alternative to the Chinese manufacturing that Trump had hoped to diminish through the use of tariffs. Even though China also buys oil from Russia, Beijing was not subject to the additional tariffs in the order signed by the Republican president.
The US and China are currently in negotiations on trade, with Washington imposing a 30% tariff on Chinese goods and facing a 10% retaliatory tax from Beijing on American products.