India's significant savings from discounted Russian oil imports have been jeopardized by new tariffs imposed by the U.S., effective today. The tariffs, introduced by former President Donald Trump, could erase the estimated $17 billion in savings India accrued since early 2022 due to its increased purchases of Russian crude amid the ongoing war in Ukraine.
Analysts from the Global Trade Research Initiative (GTRI) warn that these tariffs, reaching as high as 50%, could lead to a reduction of over 40% in Indian exports to the U.S., amounting to nearly $37 billion for the current fiscal year. This drastic measure marks a significant shift in U.S.-India trade relations, which had seen a boost from India's oil purchasing strategies.
Since the onset of the Ukraine conflict, India has capitalized on discounted Russian oil, acquiring nearly 1.5 million barrels per day. The move was aimed at diversifying its energy sources and insulating the economy from fluctuating global oil prices. However, with tariffs now in place, the sustainability of this strategy is in question.
Industry experts suggest that India will need to seek alternative markets and strategies to mitigate the impact of these tariffs. As previously reported, similar situations have unfolded in other countries facing U.S. trade sanctions, prompting a reevaluation of international trade dynamics. The coming months will be critical as India navigates these challenges while attempting to maintain its energy security and economic stability.
