{"id":48714,"date":"2026-02-02T22:17:05","date_gmt":"2026-02-02T22:17:05","guid":{"rendered":"https:\/\/www.nsemgh.com\/?p=48714"},"modified":"2026-07-08T02:21:57","modified_gmt":"2026-07-08T02:21:57","slug":"trump-slashes-tariffs-on-india-after-modi-agrees-to-stop-buying-russian-oil","status":"publish","type":"post","link":"https:\/\/www.nsemgh.com\/2026\/02\/02\/trump-slashes-tariffs-on-india-after-modi-agrees-to-stop-buying-russian-oil\/","title":{"rendered":"Trump slashes tariffs on India after Modi agrees to stop buying Russian oil"},"content":{"rendered":"\n

President Donald Trump on Monday announced he would reduce tariffs on Indian goods in exchange for, among other things, a promise to stop buying Russian oil<\/a>.<\/p>\n\n\n\n

That will be a tall task: India has been importing roughly 1.5 million barrels of Russian oil each day \u2014 even months after Trump placed tariffs on Indian goods as punishment \u2014 according to Kpler<\/a>, a global trade data provider. Russian oil makes up more than a third of India\u2019s overall imports.<\/p>\n\n\n\n

Trump said in a social media post that he spoke Monday morning with Indian Prime Minister Narendra Modi, who agreed to replace the country\u2019s Russian crude imports with oil from Venezuela and the United States. Venezuelan oil is of the same quality as Russian oil \u2014 heavy, sour and perfect for making derivatives like fuel oil and diesel, which India\u2019s refineries are already set up to process, noted Rob Thummel, senior portfolio manager at Tortoise Capital.<\/p>\n\n\n\n

It\u2019s not clear, however, how long that transition may take. Venezuela\u2019s oil infrastructure is dilapidated and requires about a decade of work and tens of billions of investment dollars to return it to the more-than-3 million barrels a day output it had achieved before the country\u2019s Socialist government took control in 1999.<\/p>\n\n\n\n

Fully replacing Russian oil with oil from Venezuela or the US will take significant investment,\u201d said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management. \u201cBut. over time, this may create additional challenges for the Russian economy.\u201d<\/p>\n\n\n\n

India is a major purchaser of Russian oil, which has been sanctioned<\/a> by most Western countries because of Russian President Vladimir Putin\u2019s war with Ukraine. China buys significantly more Russian oil than India \u2014 and unlike India, China hasn\u2019t faced additional tariffs for purchasing Russian oil. Turkey is a distant third.<\/p>\n\n\n\n

India\u2019s need for Russian oil<\/h2>\n\n\n\n

Indian government officials have defended purchasing Russian oil previously, calling it essential to the country\u2019s energy security. India is the world\u2019s third-largest consumer of oil, and Russia is a close-by seller. India relies on its crude to support its fast-growing economy, fueled by the world\u2019s largest population.<\/p>\n\n\n\n

And Russian oil has traded at a significant discount \u2013 roughly $16 a barrel \u2013 to OPEC or US crude, making it hard for India to quit, noted Robert Yawger at Mizuho Securities. Even after this agreement with the United States, Yawger said he expected India may flout sanctions and purchase Russian oil, as it has throughout the past several years.<\/p>\n\n\n\n

\u201cThere\u2019s been a zillion different ways they have been able to outflank sanction authorities,\u201d Yawger said. \u201cThey\u2019ll find a way to go dark fleet and get those barrels moved.\u201d (Dark fleets are ships that use murky tactics to transport oil for pariah states.)<\/p>\n\n\n\n

But as oil prices have come down over the past several months, the difference in price between sanctioned oil and non-sanctioned oil eroded, allowing India to make a change.<\/p>\n\n\n\n

\"Oil<\/figure>\n\n\n\n

Oil barrels loaded on a truck in Faridabad, India, on June 12, 2022.Anindito Mukherjee\/Bloomberg\/Getty Images<\/p>\n\n\n\n

\u201cWhen oil prices were high, that was big. But with oil prices coming down, that advantage is not so substantial,\u201d noted Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics and former chief economic adviser for India\u2019s government. \u201cIf you throw into the calculus that Indian exporters were suffering from Trump tariffs, it became easier to stop buying Russian oil.\u201d<\/p>\n\n\n\n

US crude prices were down 5% to about $61 a barrel on Monday, but that was mostly unchanged from before Trump\u2019s announcement. Oil fell sharply earlier in the day because traders were hopeful the United States would reach a deal with Iran without striking the crude-rich country.<\/p>\n\n\n\n

That could imply the oil market remains skeptical that the Indian deal means much at all.<\/p>\n\n\n\n

\u201cIndia has been slow-walking these trade talks for months, and the terms here are so vague that they could be anything from major to nothingburger,\u201d said Scott Lincicome, an economist at the Cato Institute.<\/p>\n\n\n\n

Tariff relief<\/h2>\n\n\n\n

Trump said Indian goods would immediately face an 18% tariff, down from a 50% \u2013 a rate that had included an additional 25% tariff Trump put in place in August<\/a> to persuade India to stop purchasing Russian oil. A White House spokesperson told CNN that Trump will fully remove the additional tariff and reduce the so-called reciprocal tariff.<\/p>\n\n\n\n

Indian goods had among highest tariff rates imposed by the Trump administration. Because of various exemptions, the effective tariff rate on Indian goods was roughly 35%, according to Subramanian.<\/p>\n\n\n\n

Trump, calling Modi \u201cone of my greatest friends,\u201d also said India\u2019s prime minister agreed to reduce India\u2019s tariffs on US goods to zero, and to remove unspecified non-tariff barriers. Although Trump didn\u2019t explain which barriers would be removed, those often include special taxes on US companies\u2019 services or value-added taxes on goods.<\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

A worker pushes a cart of packaged frozen shrimps inside a cold storage unit at a shrimp factory situated on the outskirts of Vishakhapatnam, India, April 10, 2025.Sahiba Chawdhary\/Reuters<\/p>\n\n\n\n

India also pledged to invest in American goods \u201cat a much higher level\u201d in addition to a $500 billion invesment in US energy, technology, agriculture and coal among other products, Trump said.<\/p>\n\n\n\n

Trump may have been eager to cut a deal with India after the European Union signed a long-sought free trade agreement<\/a> with India last week, noted Subramanian.<\/p>\n\n\n\n

If India gives preferential access to the EU, US business is affected,\u201d he said. \u201cThere has been a domino effect.\u201d<\/p>\n\n\n\n

Although India isn\u2019t one of America\u2019s largest trading partners, the reduction in tariffs could nevertheless make a meaningful dent: The United States imported $95.5 billion in goods from India in 2025 as of November, 3% of the value of total imported goods, and it exported $42 billion of goods there over that time, according to the US Census Bureau.<\/p>\n\n\n\n

Among the top goods the US imported from India last year are computers and other electronics, such as phones, pharmaceuticals, apparel and chemicals. Jewelry prices in the United States have risen in recent months in part because of tariffs on India. Meanwhile, India\u2019s top imports from the US were oil, gas, airplanes and airplane parts.<\/p>\n\n\n\n

Beyond goods, corporate America has grown increasingly reliant on India. Companies including American Express, JPMorgan Chase, Microsoft and Google have deepened their footprint in India, hiring workers there rather than sponsoring visas to work in the US and even opened new offices there.<\/p>\n","protected":false},"excerpt":{"rendered":"

President Donald Trump on Monday announced he would reduce tariffs on Indian goods in exchange for, among other things, a promise to stop buying Russian oil. That will be a tall task: India has been importing roughly 1.5 million barrels of Russian oil each day \u2014 even months after Trump placed tariffs on Indian goods […]<\/p>\n","protected":false},"author":8,"featured_media":48715,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_post_source_name":"","_post_source_url":"","footnotes":""},"categories":[61,12],"tags":[4836,147,11888,11110,7358,8178,11583,2152,9386,7711,5262,7396,12326,10380,9309,5196,5494,8660,159,9505,1195,12384,11365,6225,12248,6569,5491,6032,6070,2264,5440,8342,8995,10954,9343,12897,12791,10742,11352,11289,6479,5441,1761,8159,11375,9374,3805,12103,10390,3174,71,5278,10214,10722,3457,5732,5217,12898,9265,5713,5655,5349,9031,12244,6206,6675,10329,8050,13307,2485,13182,11753,2570,5180,7231,9262,184,6348,5510,6585,694,5251,6571,2982,10415,36,594],"class_list":["post-48714","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-world-news","tag-access","tag-agriculture","tag-airplane","tag-asset","tag-bank","tag-bloomberg","tag-capital","tag-chase","tag-coal","tag-cold","tag-cut","tag-data","tag-decade","tag-diesel","tag-dollars","tag-economy","tag-energy","tag-essential","tag-eu","tag-european","tag-european-union","tag-exporters","tag-factory","tag-friends","tag-frozen","tag-fuel","tag-gas","tag-goods","tag-google","tag-government","tag-india","tag-indian","tag-infrastructure","tag-international","tag-investment","tag-kpler","tag-manager","tag-market","tag-microsoft","tag-modi","tag-narendra-modi","tag-oil","tag-oil-prices","tag-opec","tag-phones","tag-population","tag-president","tag-price","tag-prices","tag-prime-minister","tag-putin","tag-quality","tag-rates","tag-removed","tag-russia","tag-russia-oil","tag-russian","tag-sabction","tag-sanction","tag-sanctions","tag-security","tag-social-media","tag-tariff","tag-tariffs","tag-taxes","tag-technology","tag-trade","tag-traders","tag-trading","tag-truck","tag-trump-administration","tag-trump-tariffs","tag-turkey","tag-ukraine","tag-union","tag-united-states","tag-united-states-president-donald-john-trump-jr","tag-us","tag-venezuela","tag-visas","tag-vladimir-putin","tag-war","tag-white","tag-white-house","tag-work","tag-world","tag-who"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/48714","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/comments?post=48714"}],"version-history":[{"count":1,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/48714\/revisions"}],"predecessor-version":[{"id":48716,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/48714\/revisions\/48716"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media\/48715"}],"wp:attachment":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media?parent=48714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/categories?post=48714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/tags?post=48714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}