A Trade Reset Tied to Russian Oil
President Donald Trump said he plans to lower U.S. tariffs on Indian goods from 25% to 18% after Prime Minister Narendra Modi agreed to stop buying Russian oil. The move follows months of pressure from Washington, as India had ramped up purchases of discounted Russian crude after Moscow’s invasion of Ukraine in 2022. Trump said the agreement also includes India slashing import taxes on U.S. products to zero and committing to buy $500 billion worth of American goods.
“This will help end the war in Ukraine,” Trump wrote on Truth Social, arguing that cutting off Russia’s oil revenue would weaken Moscow’s ability to continue the conflict. Modi welcomed the tariff reduction, calling Trump’s leadership vital for global stability and praising what he described as a productive phone call between the two leaders, though he did not directly reference Russian oil in his remarks.
Pressure Builds Over Ukraine and Trade
India’s continued purchase of Russian oil has been a sore point as Trump seeks to make good on his pledge to bring the war in Ukraine to an end. While Trump has avoided direct pressure on Russian President Vladimir Putin, he has leaned heavily on tariffs as a foreign policy tool. He has repeatedly said that targeting Russia’s energy income is the most effective way to force negotiations.
India became one of Russia’s biggest oil buyers after Europe sharply reduced imports, with Moscow supplying about 36% of India’s crude in 2024—roughly 1.8 million barrels a day. As recently as December, Putin said Russia was ready to keep fuel flowing to India despite U.S. objections.
The announcement comes as Trump’s special envoy Steve Witkoff and senior adviser Jared Kushner are expected to join new talks with Russian and Ukrainian officials in Abu Dhabi this week, according to a White House official.
Tariffs, Trade Deals, and a Shifting Balance
Trump first threatened a 25% tariff on Indian goods in June, citing India’s trade surplus and market barriers. In August, he added another 25% levy over India’s Russian oil purchases, pushing the total to 50%. With India now pledging to halt those purchases, the White House says the additional penalty will be dropped, bringing the overall rate down to 18—close to the tariffs applied to the EU and Japan.
The shift comes as India deepens trade ties elsewhere. Just days ago, New Delhi finalized a long-awaited free trade agreement with the European Union, covering nearly all goods and affecting close to two billion people. India has also recently signed deals with Oman and New Zealand, signaling a broader push to diversify trade relationships as global supply chains adjust to Trump’s tariff-heavy approach.
