India’s Response to Trump’s Tariff Threat: Continued Purchases of Russian Crude Oil
On August 5, 2025, U.S. President Donald Trump announced a 25% penal tariff on India for its crude oil purchases from Russia. A year later, India now faces the possibility of tariffs reaching up to 100%. Despite previous tariffs, India continued to procure Russian crude, even as U.S. sanctions on certain Russian oil firms led to a decline in available non-sanctioned crude. An interim trade deal between India and the U.S. in February reduced tariffs to 25% and eliminated the penal tariffs, but uncertainty looms as a new sanctions bill could reinstate tariffs.
Proposed Sanctions Bill
The proposed Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 would grant the U.S. President the authority to impose tariffs of up to 100% on countries purchasing significant quantities of Russian crude oil and gas. The U.S. Trade Representative will review the top five importers of Russian energy every 180 days before the President decides on tariff imposition. Countries importing less than 15% of their energy needs from Russia and demonstrating efforts to reduce dependence may qualify for exemptions.
The bill also includes secondary sanctions targeting shipping companies, insurers, and vessels associated with Russia’s “shadow fleet.” Currently, the top five importers of Russian energy are expected to include China, India, Slovakia, Hungary, and Azerbaijan.
India’s Dependence on Russian Crude
India’s reliance on Russian crude oil has surged, with imports reaching record highs. Historically, Russia was not a major supplier, but after the onset of the Ukraine conflict and subsequent European sanctions, Russian crude became available at significant discounts. Since 2022, Russian oil has constituted over 30% of India’s total crude imports. However, imports dipped in early 2026 following U.S. sanctions on Russian firms, only to rise again as geopolitical tensions in the Middle East disrupted other oil supplies.
Experts indicate that Russian crude has become essential for India’s energy security and refining economics. The likelihood of India halting Russian crude imports in response to new tariffs appears low, given that Russia supplied approximately 55% of India’s crude imports in July, the highest share since the Ukraine conflict began.
Challenges of Reducing Russian Imports
Experts assert that a complete cessation of Russian crude imports is unlikely in the near term. Indian refiners are expected to continue purchasing Russian oil unless sanctions severely disrupt shipping, insurance, or payment mechanisms. Any reduction in imports would likely be gradual, as refiners must consider commercial factors, supply security, and long-term contracts.
The economic implications of reducing Russian oil inflows are significant. A decrease of even a third would necessitate replacing 0.8-1.0 million barrels per day, amounting to up to 20% of India’s total crude imports. The potential increase in crude prices could lead to an additional $1-1.8 billion in annual costs for India.
Alternatives for Indian Crude Supply
India has a diversified crude supply chain, sourcing from over 40 countries. Should Russian crude become unviable, India could increase imports from Venezuela, Iraq, Saudi Arabia, the UAE, the U.S., West Africa, Brazil, and Guyana. However, replacing Russian volumes entirely poses challenges, particularly given ongoing geopolitical tensions in the Middle East that constrain supply.
Experts caution that while alternative sources exist, they may involve higher costs and longer shipping routes. India’s heavy reliance on imported crude means that any significant shift in sourcing could materially increase its import bill and compress refinery margins.
Legislative Hurdles for the Sanctions Bill
The proposed sanctions bill has garnered bipartisan support but faces challenges in the House of Representatives. Lawmakers have expressed concerns about the broad powers it grants the President to impose tariffs. The bill’s future remains uncertain, especially with congressional elections approaching and the House currently in recess.
If the Trump administration opts to impose tariffs on countries buying Russian crude, the global oil market could feel the impact. The U.S. will need to balance its geopolitical objectives with the risk of elevating global oil prices, which could have inflationary repercussions domestically.
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