Trump warns India of potential tariff hikes over Russian oil imports

• The U.S. raised tariffs on Indian goods to 50% last year due to India's Russian oil purchases, yet Indian exports to the U.S. increased despite the tariffs
• India is requesting weekly disclosures of Russian and U.S. oil purchases and anticipates Russian crude imports will drop below 1 million barrels per day
• Modi has spoken with Trump at least three times since tariffs were imposed, but discussions remain inconclusive with Indian officials maintaining a firm stance on U.S. trade demands

Summary

Key Development: President Donald Trump threatened to raise tariffs on India unless New Delhi reduces Russian oil purchases, stating aboard Air Force One that "we can raise tariffs on them very quickly." Trump referenced his relationship with Prime Minister Modi, saying "He knew I was not happy, and it was important to make me happy."

Current Tariff Situation: The U.S. imposed 50% tariffs on Indian goods last year to penalize India's heavy Russian oil purchases. Despite these tariffs, India's exports to the U.S. increased during the period, emboldening Indian officials to maintain a firm stance on U.S. trade demands.

India's Response: India has shown limited flexibility on issues like agricultural imports but is taking steps toward compromise. Sources indicate India is considering weekly disclosures of Russian and U.S. oil purchases and expects Russian crude imports to fall below 1 million barrels per day as it pursues a trade deal with Washington. Data already shows declining Russian oil purchases.

Diplomatic Efforts: Modi has held at least three phone conversations with Trump since the tariff implementation, though discussions remain inconclusive. India's Commerce Secretary Rajesh Agrawal met with U.S. Deputy Trade Representative Rick Switzer last month to discuss bilateral trade relations.

Market Implications: The ongoing trade tensions between the world's largest democracy and the U.S. could impact energy markets, bilateral trade flows, and India's economic growth trajectory. The situation highlights Washington's use of tariffs as leverage to influence geopolitical alliances, particularly regarding Russian energy dependence.