In the past, relations between India and the United States were good. Trade between the two countries is significant. After Russia launched an attack on Ukraine in February 2022, the United States and other Western nations imposed sanctions on Russian oil. However, India has continued purchasing Russian oil at cheaper rates. Previously, India bought only negligible amounts of Russian oil, but since then it has become one of Russia’s main customers.
In retaliation for India’s purchase of Russian oil, Trump’s additional tariffs are set to hurt the entire Indian export sector. However, the main beneficiary of the Russian oil trade appears to be Mukesh Ambani, who is considered close to Indian Prime Minister Narendra Modi.
The United States has officially implemented a 50 percent tariff on a wide range of Indian exports, marking one of the most significant trade disputes between the two countries in recent years.
The move, which came into full effect on August 27, follows weeks of escalating tension. Earlier this month, Washington had imposed a 25 percent levy, but an additional 25 percent was added after New Delhi continued to purchase Russian oil despite US pressure to reduce imports.
The tariff applies to over half of India’s exports to the United States — including textiles, gems and jewelry, leather goods, shrimp, seafood, and machinery — sectors that collectively account for tens of billions of dollars in trade each year. Industry leaders warn that the new duties could slash exports by 30 to 50 percent, leading to massive layoffs in labor-intensive hubs such as Surat’s diamond industry, where thousands of workers are already facing job losses.
Not all sectors, however, are affected. Pharmaceuticals, semiconductors, electronics, and energy-related goods remain exempt, reflecting Washington’s reliance on Indian supply chains in these critical areas.
The impact was immediately felt in India’s financial markets, with the rupee tumbling to record lows and stock indices slipping as investor confidence weakened. New Delhi has strongly criticized the US decision, calling the tariffs unfair and politically motivated. Indian officials are now pushing for diversification of export markets in Asia, Africa, and Europe to cushion the blow.
Analysts say the tariff war marks a low point in India-US relations, which have long been described as a strategic partnership. While cooperation continues in defense and security under platforms like the Quad, the latest trade rift underscores the fragility of economic ties when geopolitical interests clash.
For Washington, the tariffs are framed as a matter of “national security” tied to India’s continued dealings with Moscow. For New Delhi, the measures are seen as an economic shock that threatens millions of jobs and undermines one of its largest trade relationships.
Unless negotiations resume, experts warn the dispute could have lasting consequences, not only for bilateral trade but also for the broader geopolitical balance in the Indo-Pacific.
According to The Business Standard, most of the Indian companies purchasing Russian oil are state-owned enterprises, and the refined oil from these companies is primarily used for domestic consumption. However, Reliance, owned by Mukesh Ambani, and Nayara have profited more by selling refined Russian oil to other countries.
Although India is traditionally a net importer of petroleum products, it has now turned into an exporter by buying cheaper Russian crude. As reported by The Business Standard, Reliance alone accounts for 71 percent of India’s oil exports. However, the company has not disclosed how much profit it has made from these exports.
On the other hand, India will also have to weigh the benefits it gains from buying cheap Russian crude oil against the losses it suffers due to Trump’s high tariff rates.
