US-India Trade tensions Escalate Over Russian Oil Purchases
A recent escalation in trade tensions between the United States and India centers on India’s continued purchase of Russian oil, despite pressure from washington. Former US President Donald Trump initially criticized India’s relationship with Russia, stating he “doesn’t care what India does” and suggesting their economies could suffer together. This followed an initial statement offering no specifics.
The criticism prompted a firm response from India, with two government sources confirming to Reuters that New Delhi intends to maintain its oil imports from Russia, even in the face of Trump’s threats. Stephen Miller, a top aide to Trump, further intensified the pressure, accusing India of financially supporting Russia’s war in Ukraine through these purchases. Trump had previously threatened ample tariff increases against India.
India’s Ministry of External Affairs (MEA) countered these accusations, pointing out that the US and European Union have also engaged in trade with Russia since the 2022 invasion of Ukraine, importing goods such as energy, fertilizers, mining products, chemicals, iron, steel, and machinery. The MEA argued that singling out india for criticism is “unjustified and unreasonable,” asserting India will prioritize its national interests and economic security.
India is a major global oil consumer, ranking as the world’s third-largest importer and the largest purchaser of seaborne Russian crude. This trade represents a meaningful revenue stream for Russia during its ongoing conflict in Ukraine.The potential US tariffs on India are higher than those negotiated with other nations during the Trump governance. Vietnam faces a 20% tariff, Indonesia 19%, and Japan and the EU 15%.
Adding to the complexity,Trump recently announced a trade agreement with Pakistan,India’s long-standing rival,which islamabad believes will lower tariffs on its exports. This growth has caused discontent in New Delhi, which has voiced concerns about Trump’s perceived closeness with Pakistan and its impact on trade negotiations.Despite past displays of camaraderie between Trump and Indian Prime Minister Narendra Modi, India has adopted a more assertive stance towards the US in recent weeks. Trump has claimed credit for a ceasefire between India and Pakistan in May, a claim disputed by India, which maintains the ceasefire wasn’t a result of US intervention or trade threats.
Trump’s harsh rhetoric has created a arduous situation for Modi and his Bharatiya Janata Party (BJP). Previously, the BJP actively campaigned for Trump’s re-election, with supporters even organizing prayers and constructing a temple dedicated to his image. However, Trump has disregarded this support, focusing instead on India’s energy imports and trade policies as non-negotiable issues.
The Indian government is currently consulting with businesses impacted by the potential tariffs, described as “stakeholders,” to formulate a response. Though, initial efforts to find a compromise appear to have stalled.
