Exim Matters: Russian oil, American tariffs and Indian exporters

Exporters have adapted to tariffs and geopolitical disruptions, but thinner margins and fresh US levies could make resilience harder to sustain

Last week, the good feeling generated by the Brics summit in New Delhi and the encouraging export figures for August evaporated quickly. Houthi attacks on Saudi Arabia threatened disruption along the Red Sea route, crude oil briefly climbed to about $108 a barrel and the rupee weakened beyond 96 to the dollar. Then, US President Donald Trump signed the legislation empowering him to impose additional tariffs of up to 100 per cent on goods from countries buying Russian oil. It had received strong bipartisan support, securing 86 votes to 11 in the Senate and 262 to 159 in the House of Representatives. The August export figures offered reassurance, but not grounds for complacency. India’s merchandise exports increased by 26.12 per cent from August 2025 to August 2026, reaching $43.81 billion. However, they were slightly lower than July’s $44.24 billion. During April-August, exports grew by 17.85 per cent, from $183.21 billion in the corresponding period last year to $215.91 billion. 

Despite disruptions caused by higher tariffs and West Asian disruptions, exporters adapted. They renegotiated prices, changed routes, diverted consignments and searched for new buyers. India’s exports to the US during April-August reached $42.79 billion, against $40.39 billion a year earlier, an increase of only about 5.9 per cent, well below overall export growth. These figures do not reveal the margins sacrificed to retain orders and market share. That reminded me of the unnamed common man played by Naseeruddin Shah in the Hindi film A Wednesday!, who says, “We are resilient by force, not by choice.” The circumstances are different, but the observation applies to Indian exporters. 

The new US law raises fresh uncertainties. When Trump will impose tariffs on Indian goods, what rate he will choose, which products, including pharmaceuticals, may be exempted and how long the tariffs may last are all uncertain.

 Given high US gasoline prices and inflationary risks from restricting Russian oil supplies, he may defer difficult decisions until after the midterm elections in early November. India’s response is almost certain. Cheaper Russian crude helps contain costs across the economy, whereas reduced access to the US hurts only some export sectors. Giving up Russian supplies could raise fuel and transport costs, widen the trade deficit, aggravate inflation and put further pressure on the rupee. It could also be portrayed domestically as India bowing to American pressure.  

India is, therefore, unlikely to stop purchasing Russian oil merely to avoid US tariffs. China, given its strategic 

relationship with Russia and wider confrontation with Washington, is even less likely to yield. The question is how Trump will respond if they continue buying Russian oil. 

Indian exporters cannot wait for the answer. They must presume that their goods will attract higher US tariffs. Existing and future contracts should address tariff changes, price renegotiation and sharing of additional costs. They should front-load shipments before new tariffs take effect. They must also intensify efforts to develop alternative markets. The government should engage the Trump administration to seek exemptions, moderate rates or adequate transition periods, although India has limited leverage. 

Traders usually find a way out. Yet every adjustment carries costs, often hidden in thinner margins, delayed orders and greater credit risks. Hope for relief is natural, but it is not a strategy. Resilience is not invulnerability. Staying afloat is one thing; sprinting is quite another.