Trade Breakthrough Tied to Russian Oil
President Donald Trump said he plans to cut tariffs on Indian goods to 18%, down from 25%, after Indian Prime Minister Narendra Modi agreed to stop purchasing Russian oil. Trump said the deal also includes India lowering import taxes on U.S. products to zero and committing to buy $500 billion worth of American goods.
India has been a major buyer of discounted Russian oil since the invasion of Ukraine in 2022, a move Washington argues has helped bankroll Moscow’s war effort. Trump has repeatedly pressed New Delhi to end those purchases, framing the issue as both an economic and geopolitical priority.
“This will help end the war in Ukraine,” Trump wrote on Truth Social, saying cutting off Russia’s oil revenue is key to forcing Moscow to the negotiating table. Modi welcomed the tariff reduction, calling Trump’s leadership “vital for global peace and prosperity,” though he did not directly address the oil issue.
Pressure Mounts as Ukraine War Drags On
Trump has struggled to deliver on his campaign promise to quickly end the war in Ukraine, even as he has avoided placing direct pressure on Russian President Vladimir Putin. Instead, he has leaned heavily on tariffs and trade threats to influence foreign governments, including India.
India’s continued oil purchases have been a long-running point of friction. In 2024, Russia supplied nearly 36% of India’s crude imports—about 1.8 million barrels a day—making India one of Moscow’s most important energy customers after Europe sharply reduced its buying.
The announcement comes ahead of fresh talks involving U.S., Russian, and Ukrainian officials expected later this week in Abu Dhabi. Trump believes targeting oil revenues, rather than direct sanctions alone, offers the best chance of pushing Russia toward ending the conflict.
From Tariff Threats to Trade Deals
Just months ago, Trump sharply escalated pressure on India. In June, he announced a 25% tariff on Indian goods over trade imbalances, followed by another 25% hike in August tied specifically to India’s Russian oil imports. Together, those moves pushed total tariffs as high as 50%.
With the new agreement, those penalties would be rolled back, bringing India’s tariff rate closer to the roughly 15% charged on goods from the EU and Japan. A White House official confirmed that the additional oil-related tariff would be dropped entirely.
The shift comes as India accelerates trade diplomacy elsewhere. New Delhi recently finalized a major free trade deal with the European Union after nearly 20 years of negotiations and has also signed agreements with Oman and New Zealand. The moves reflect India’s push to diversify its trade ties as global commerce adjusts to Trump’s aggressive tariff strategy.
