Trade Deal Tied to Russia Oil Break
President Donald Trump said he plans to cut tariffs on Indian goods from 25% to 18% after Prime Minister Narendra Modi agreed to stop buying Russian oil. The announcement follows months of pressure from Washington, as India continued to purchase discounted crude from Russia despite Western efforts to choke off Moscow’s war funding after its 2022 invasion of Ukraine.
Trump also claimed India would slash import taxes on U.S. goods to zero and commit to buying $500bn worth of American products. Calling the move a step toward peace, Trump said targeting Russia’s oil revenue could help bring an end to the war in Ukraine.
Modi welcomed the tariff reduction, praising Trump’s leadership and describing a recent phone call between the two as “wonderful.” He did not, however, directly confirm an end to Russian oil purchases.
A Longstanding Friction Point
India’s energy ties with Russia have been a sticking point for months. Since the start of the Ukraine war, India has become one of Moscow’s biggest oil customers, buying large volumes of discounted crude as Europe cut back. In 2024 alone, Russia supplied around 36% of India’s crude imports, roughly 1.8 million barrels per day.
Trump, who has struggled to deliver on a pledge to swiftly end the Ukraine war, has increasingly leaned on tariffs as both an economic and diplomatic weapon. He has argued that squeezing Russia’s energy income is the fastest way to push President Vladimir Putin toward negotiations.
The tariff announcement comes as Trump’s special envoy Steve Witkoff and his son-in-law Jared Kushner are expected to take part in fresh talks with Russian and Ukrainian officials in Abu Dhabi later this week, according to a White House official.
Tariffs, Trade, and Global Shifts
Trump had previously hit India with steep trade penalties, including a combined 50% tariff after accusing New Delhi of failing to narrow its trade surplus and continuing to buy Russian oil. With the latest agreement, those extra penalties would be lifted, bringing India’s tariff rate closer to levels applied to the EU and Japan.
The move also lands amid a flurry of trade activity for India. Just days earlier, New Delhi and the European Union sealed a long-awaited free trade agreement covering nearly all goods and affecting close to two billion people. India has also wrapped up deals with Oman and New Zealand as it pushes to diversify trade partners and reduce exposure to U.S. tariff swings.
While India’s historic relationship with Russia has centered on defense rather than energy, the Ukraine war reshaped the dynamic. Whether Trump’s latest tariff cut marks a lasting shift—or another chapter in an unpredictable trade strategy—remains to be seen.
