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The Russian vessel Vladimir Vinogradov unloads crude at the Deendayal Port in the western state of Gujarat, India, last year. For months, Indian and American trade officials haggled over things like tariffs and import quotas, trying to work out an agreement both sides could live with. President Trump, intent on closing a $44 billion trade deficit with India, threatened to impose tariffs on Indian goods sent to America. Then, Mr. Trump brought Russia into it. On July 30, Mr. Trump said that Indian goods would be subject to a 25 percent tariff, a higher rate than its Asian competitors. He berated the country for its purchases of Russian energy, posting on social media that India was 'Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE.' For that, Mr. Trump added, India would pay an unspecified penalty on top of the 25 percent levy. A day after saying he would 'substantially' increase the 25 percent levy, the president said on CNBC on Tuesday that he would impose higher tariffs on India in the next 24 hours. Plenty of other people and organizations had made similar arguments about how India was abetting Russia in its war on Ukraine by purchasing Russian oil. But now Mr. Trump had made it part of the U.S.-Indian trade talks. Along with dozens of other countries, India is facing the prospect of U.S. tariffs starting on Thursday. Mr. Trump's demand, which India calls outrageous and unwarranted, has dropped like a stink bomb in the two countries' trade talks. Here's what you need to know about the dispute. Isn't Russia under sanctions? Moscow is under sanctions, primarily by the United States and the European Union. In an attempt to hurt Russia's war effort, the West imposed a cap on the price Russia could charge for its oil. But India did not sign on to that plan. After the sanctions were imposed and European and other markets shut their doors to Russia, seaborne exports to India from Russia started scaling up. On Tuesday, Russia pushed back against Mr. Trump's threats against India. Russia believes it is 'illegal' to try to 'get other countries to cut trade ties with Russia,' Dmitri S. Peskov, a Kremlin spokesman, told Russian news agencies. China is another major buyer of Russian oil that did not join the sanctions effort. The country maintains particularly friendly relations with Russia, and trade between China and Russia is up two-thirds since Russia invaded Ukraine. Last year, their two-way trade exceeded $240 billion, with China sending everything from cars to drones. Other than China, no country is buying more Russian oil these days than India. It shows no sign of stopping, either. On Tuesday, Lloyd's List, the shipping industry's main trade journal, reported that three oil tankers made delivery at Indian ports over the weekend — after Mr. Trump had threatened to impose a penalty. How much Russian oil does India buy? Much more than it did before the Russian president, Vladimir V. Putin, launched a full-scale invasion of Ukraine in February 2022. Shortly before the start of the war, crude oil from Russia accounted for 0.2 percent of how much India imports. By May 2023, Russia was selling India more than two million barrels of crude a day, or roughly 45 percent of its imports. India has bought a nearly constant flow of Russian oil for the past two years. Prices fluctuated, with total sales worth more than $130 billion per year. Iraq and Saudi Arabia, traditionally India's biggest suppliers, have been pushed to the side. In June 2023, an analysis of shipping data by The New York Times found that dozens of Russian tankers were arriving every month to Indian oil refineries. Why is India buying so much oil from Russia? Well, it's cheaper since sanctions have narrowed potential demand and held down the price. Another reason: India is not a major producer of oil, and it is the world's most populous nation and fastest-growing big economy. It needs a lot of oil. India's purchases of Russian oil have suited both sides. Russia is able to sell its crude oil, theoretically under a price cap the European Union had set at $60 a barrel, and India buys it at a discount. India's oil companies have refined some for domestic consumption and exported the rest to Europe and elsewhere as diesel and other products. In addition to helping power India's economy, cheap Russian oil has helped India establish a lucrative business exporting refined products to regions that need fresh energy supplies. One of India's refineries, the Jamnagar site on the country's west coast, is the largest in the world. The surge in imported Russian oil has helped to push up profits for companies like the Indian conglomerate Reliance Group, which runs the Jamnagar refinery. Reliance's stock price grew 34 percent since the war began, a period in which Exxon Mobil's has been flat. In recent weeks, refineries in India have been buying less Russian oil than usual, according to Kpler, which tracks commodities and shipping data. But to completely replace the Russian fuel it has been importing would be difficult for India, in part because its refineries are configured for the type of oil Russia produces. 'The pivot away from Russia — if forced — will be costly, complex and politically fraught,' Kpler wrote in a note. Nataliya Vasilyeva contributed reporting.
