Why Trump's threat of 'secondary tariffs' on Russia is bad news for India

First Post

16-07-2025

India currently imports 1.6 to 1.7 million barrels of discounted Russian oil daily — roughly 35 per cent of its total crude demand. Donald Trump's threat of 100 per cent secondary tariffs on Russian trade partners within 50 days could disrupt these flows and imperil a bilateral trade agreement with the US, just as final negotiations near their August 1 deadline read more
US President Donald Trump boards Air Force One at Morristown Airport as he departs for Washington, in Morristown, New Jersey, US, July 6, 2025. File Image/Reuters
India now faces a potential economic challenge.
US President Donald Trump's latest policy proposition — a sweeping set of 'secondary tariffs' aimed at countries maintaining commercial ties with Russia — could directly disrupt India's critical oil imports and complicate its trade with the United States.
The threat of 100 per cent tariffs on Russian trade partners has raised alarm in New Delhi and across many capitals in Asia and South America.
Trump has declared that unless the Kremlin agrees to halt its military offensive in Ukraine within 50 days, nations purchasing Russian oil, gas, arms or agricultural products will face severe trade penalties.
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The move is seen as an attempt to suffocate the Kremlin's economic lifelines by penalising its remaining trading allies, including India, China, Brazil, Turkey, Vietnam and the United Arab Emirates.
Why India is a target
Speaking from the White House, Trump announced a bold new initiative to apply 100 per cent tariffs on nations that continue economic engagements with Russia, particularly in the sectors that fund the war effort.
'We're going to be doing very severe tariffs if we don't have a deal in 50 days, tariffs at about 100%,' the US president stated.
Rather than directly targeting Russian exports, the plan focuses on cutting off Moscow's access to international markets by penalising the buyers — what Washington refers to as 'secondary tariffs.'
These would apply to goods imported into the United States from any country that maintains significant trade with Russia, especially in energy and defence.
India's role in this ecosystem is significant. Since Western sanctions began taking effect in 2022, following Russia's full-scale invasion of Ukraine, India and China have become the top two destinations for Russian oil.
In 2023, both countries surpassed the European Union in seaborne crude imports from Russia, jointly accounting for nearly 85–90 per cent of the total volume exported by Russian state-backed energy firms.
India alone currently imports about 1.6 to 1.7 million barrels per day, which fulfils around 35 per cent of its daily oil needs, according to market experts.
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India's dependence on Russian oil has grown due to the steep discounts offered by Moscow since the start of the war. These discounts brought prices below the $60 per barrel price cap set by the European Union, making Russian oil financially appealing for Indian refiners.
Russia's crude grades — medium sour and light sour — are also better suited to India's refining infrastructure than the lighter, sweeter crude grades produced in the US.
Brazil, China, UAE and beyond
India is not alone in its vulnerability. The secondary tariff threat is aimed at more than a dozen countries across multiple continents.
In West Asia, the United Arab Emirates functions as a financial conduit for Russian energy transactions, even if it is not a primary consumer of Russian oil. Dubai, in particular, has become a financial sanctuary for Russian capital and oligarch wealth.
Turkey, a Nato member, remains heavily reliant on Russian fossil fuels, including both crude oil and natural gas.
Brazil, a major agricultural economy, is one of the largest buyers of Russian fertilizers — a key input for its production of soybeans, sugar and coffee.
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Vietnam and Thailand, which have tried to maintain a neutral stance in the Russia-Ukraine conflict, also maintain energy and defence ties with Moscow.
The secondary tariff scheme is meant to push these countries toward breaking those economic relationships.
But of all the countries affected, India stands out — not only for its large-volume oil purchases but also because of its growing strategic partnership with the United States.
Support for Trump's pressure campaign
Trump's strategy has gained endorsement from key figures in Nato and the US Congress. Mark Rutte, the Secretary General of Nato, expressed strong support for the secondary tariff plan during his recent meetings with US lawmakers and with Trump himself.
'My encouragement to these three countries, particularly is, if you live now in Beijing, or in Delhi, or you are the president of Brazil, you might want to take a look into this, because this might hit you very hard,' said Rutte.
US President Donald Trump meets with NATO Secretary General Mark Rutte, in the Oval Office at the White House in Washington, DC, US, July 14, 2025. File Image/Reuters
'So please make the phone call to Vladimir Putin and tell him that he has to get serious about peace talks, because otherwise this will slam back on Brazil, on India and on China in a massive way,' he added.
US Republican Senator Thom Tillis also endorsed Trump's move but raised concerns that the 50-day deadline might allow Putin time to escalate the war further.
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He stated, 'Putin would try to use the 50 days to win the war, or to be better positioned to negotiate a peace agreement after having murdered and potentially collected more ground as a basis for negotiation.'
At the same time, bipartisan legislation is gaining momentum in the Senate.
A new bill introduced by Republican Lindsey Graham and Democrat Richard Blumenthal would authorise the US president to impose tariffs as high as 500% on countries purchasing Russian uranium, oil or gas.
India-US trade deal
As Trump pivots toward a more aggressive sanctions policy, Indian officials are working to avoid the fallout. Earlier this year, India was notably excluded from a list of 14 countries subjected to new US import duties — a list that included close American allies like Japan and South Korea.
Washington's decision to spare India at the time was seen as a goodwill gesture, especially as both countries were advancing talks on a bilateral trade agreement.
However, Trump has made clear that this reprieve will not last forever. Although the US initially imposed tariffs on April 2, their full enforcement was postponed for 90 days, with an extended grace period until August 1.
This deadline, if unmet, may bring India back under tariff scrutiny.
Indian Commerce Minister Piyush Goyal recently told the Press Trust of India that negotiations with Washington were progressing at 'a very fast pace.'
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Both countries have finalised a terms-of-reference framework for the trade deal, following a visit to New Delhi by US Vice President JD Vance.
Yet critical roadblocks remain. The US continues to press India to open its markets to genetically modified crops — a proposal that has triggered concern among India's large agricultural base.
Other unresolved issues include access for US dairy products, regulatory hurdles on Indian pharmaceutical exports, and tariff barriers affecting automobile components and steel.
These issues have taken on greater urgency with Trump's 50-day deadline ticking. Indian trade representatives are working intensively to reach consensus before the cutoff.
How Russia reacted to Trump's new ultimatum
Despite the mounting pressure, Moscow has not shown signs of yielding.
Senior Russian officials dismissed the secondary sanctions threat outright, calling Trump's ultimatum 'unacceptable.'
Far from causing panic, Trump's comments were met with optimism in Russian markets.
Following his announcement, Russia's stock exchange recorded a 2.7 per cent increase, and the ruble appreciated against the US dollar.
Analysts suggest that investors may believe either that a diplomatic resolution is still achievable within the 50-day window or that Russia can withstand the sanctions through alternative trade channels.
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With inputs from agencies