New Delhi: Trump’s steep tariffs on Indian exports are counterproductive for the United States, as they damage critical economic ties, force India to rely more on cheap Russian oil to offset losses, and threaten American geopolitical interests in Asia.
Economic Impact of Tariffs
A 50 percent tariff has been imposed on a wide range of Indian goods, including textiles, gems, jewelry, footwear, and chemicals—sectors that account for 70 percent of India’s US exports. This move is expected to slash Indian merchandise exports to the US from $86.5 billion in 2025 to around $50 billion by 2026. Analysts project a direct hit of $55–60 billion to India’s economy, jeopardizing hundreds of thousands of jobs and dampening growth in the fastest-growing large economy.
Geopolitical Fallout
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Moody’s and Barclays warn that tariffs risk pushing India closer to China, as India seeks alternative markets and partners. The tariffs have already disrupted negotiations for a new trade deal and diminished trust between the strategic allies. US attempts to curb India’s Russian oil purchases—while exempting China, the largest importer—appear inconsistent and fuel perceptions of unfairness.
Increasing India’s imports of cheap Russian oil offsets some losses from US tariffs by lowering energy costs for domestic industry, helping preserve export margins and supporting overall economic stability despite trade headwinds.
Cost Savings from Russian Oil
Since 2022, India has saved at least $17 billion by importing discounted Russian crude. Russian oil typically offers a $2.5–$25 per barrel discount compared to global benchmarks, directly reducing input costs for the refining, manufacturing, and transport sectors. In 2024, Russian crude accounted for 35–40 percent of India’s total oil imports—up from just 3 percent in 2021—helping insulate domestic prices for 1.4 billion citizens and keeping inflation in check.
Cushioning Tariff Impact
With US tariffs cutting export profits by an estimated $37 billion in 2025, cheap Russian oil acts as a financial buffer, especially for energy-intensive exporters such as textiles, chemicals, and gems. By September 2025, Indian refiners plan to increase Russian imports by 10–20 percent (around 150,000–300,000 barrels/day), preserving cost structures and competitiveness despite tariff pressures.
Support for Exporters
Economists such as Raghuram Rajan have proposed a windfall tax on refiners benefiting from Russian crude to create a fund that supports Indian exporters hit hardest by US tariffs, ensuring the savings are redistributed where needed most. This strategy could help soft-land the blow, enabling exporters to maintain orders and jobs while the country navigates trade tensions.
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