Trump raises tariffs on Indian exports to 50% due to India's continued oil trade with Russia

India is now staring down two major problems at once. On one side, fuel demand is falling fast. On the other, the United States has just jacked up tariffs on Indian exports to a painful 50%, adding fresh pressure to an already struggling economy.

Trump’s decision was tied directly to India’s ongoing oil trade with Russia, which the White House clearly isn’t happy about. Trump’s administration sees the Russian crude purchases as undermining U.S. efforts to squeeze Moscow’s war funding.

The new tariff rate is now one of the highest Trump has imposed on any trading partner since returning to the Oval Office. And even though only about 20% of India’s total exports go to the U.S., UBS flagged that specific sectors like apparel, textiles, chemicals, gems, and jewelry are directly in the line of fire.

UBS puts the number at around $8 billion worth of goods now vulnerable to disruption. That’s roughly 2% of India’s GDP. Meanwhile, Trump has also declared Russia an “extraordinary threat” to the United States.

Fuel use dips across key products in July

Anyway, new data from India’s oil ministry showed that overall fuel consumption dropped to 19.43 million metric tons in July. That’s a 4.3% slide from June, when the number was at 20.22 million, and also down from 20.24 million a year earlier.

Diesel, the country’s most-used fuel, dropped the most. The government reported a 9% monthly fall in diesel sales to 7.36 million tons. Gasoline, or petrol, came in at 3.49 million tons, slightly lower than June but still 5.8% higher than last year.

There were small increases, too. Liquefied petroleum gas, used for cooking, climbed 10.3% to 2.78 million metric tons compared to June. It also showed a year-over-year rise of 4.9%.

But naphtha, which is used in petrochemical manufacturing, went the opposite direction, down 2% from June and a full 18% lower compared to the same time last year. Bitumen, used for making roads, saw the sharpest drop with a 32% collapse from June levels.

Russia’s oil purchases still flowing despite U.S. pressure

While all this was happening, India kept up its Russian crude imports. According to figures from Kpler, Moscow shipped around 3.35 million barrels per day of crude in recent weeks. India picked up about 1.7 million of that, with China taking another 1.1 million.

Russian oil isn’t under full sanctions like gas is. Instead, it’s subject to a $60 price cap set by G7 nations after the 2022 invasion of Ukraine. The idea is to let the oil flow but cap Moscow’s earnings. It hasn’t stopped India from buying.

Trump is trying to pressure BRICS countries, including India, to back away from Russia. He’s even warned of a new 10% tariff on imports from those nations, accusing them of “aligning themselves with Anti-American policies.”

India’s trade ties with China have also started to warm up again, making Washington even more nervous. Narendra Modi is planning to attend the Shanghai Cooperation Organisation summit in Beijing on August 31, his first visit to China in over seven years.

He last met with Chinese President Xi Jinping during a BRICS summit in Russia last year, which led to a slow diplomatic thaw between the two Asian giants, who had been locked in tense border disputes for years.

Amid all of that, oil prices had risen slightly early in the day, but fell again after U.S. Secretary of State Marco Rubio told reporters, “We’ll have more to say about that later on today,” when asked about new sanctions on Russia.

Still, the U.S. Energy Information Administration confirmed that American firms pulled 3 million barrels of crude from inventories during the week ending August 1. That number was higher than analysts’ forecast of 0.6 million barrels, although slightly lower than the 4.2 million-barrel draw cited by the American Petroleum Institute.

But Europe hasn’t cut off all Russian energy either. In 2021, Russia was the European Union’s biggest supplier of petroleum, making up 29% of its oil imports. That share has dropped to just 2% this year after the EU banned seaborne Russian crude.

But Eurostat data from the first quarter of 2025 showed that 19% of Europe’s LNG imports still come from Russia. UBS analyst Giovanni Staunovo explained that only some LNG terminals, like Arctic LNG 2, are under sanctions; not all Russian gas exports are blocked.

That makes it harder for Washington to argue that India should fully stop buying from Russia when Europe still hasn’t.

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