Trump dangles penalty sword to wean India away from Russia

 

The United States (US) president Donald Trump yesterday announced a 'penalty' on India's defence and energy imports from Russia, along with a blanket 25 per cent tariff on Indian goods, to be in effect from August 1. While the penalty might be seen as a measure to rein in the Kremlin's revenues from its crude oil and arms sale and force Russia to end the Ukraine war, the constant tariff threats surrounding India may be used by the US as a bargaining chip in the ongoing India-US trade deal negotiations.

  

The Western bloc has imposed sanctions on the buyers of Russian oil during the Ukraine-Russia war. Meanwhile, India has ramped up its purchase of the discounted Russian oil to ensure its energy security. In FY22, crude oil imports from Russia accounted for a measly 2 per cent of India's total crude oil imports in value. However, these numbers jumped to 35.15 per cent in FY25. Meanwhile, the share of the US in such imports halved from 9.24 per cent in FY22 to 4.58 per cent in FY25. A similar, but modest, trend can be seen in imports of coal and petroleum products too. 

   

New Delhi's reliance on Russia for defence equipment imports has been a persistent irritant in the India-US relations. During the period 2014-24, India imported more than 46 per cent of its arms from Russia and just 13 per cent from the US. From 2020-24, the share for Russia and the US has come down to 36 per cent and 9.5 per cent respectively, as India has diversified its sources and improved its indigenous capabilities.  

   

In Q2 2025, the US government earned more than $64 billion in customs revenue alone as it hkied tariffs on countries. This led the US government to earn $108 billion from customs duties in the first nine months of the US financial year (October-June). The US had never got $100 billion from import tariffs even in an entire financial year.