Trump Threatens Harsher Tariffs
By Chris Williams
NEW DELHI –
Criticism is mounting over India’s approach to its ties with the United States after President Donald Trump issued fresh warnings of even steeper tariffs if New Delhi does not cut back on buying Russian oil, adding pressure to an already tense relationship.
As of 8 January 2026, India is grappling with existing 50% tariffs on its exports to the US, which include a 25% penalty specifically tied to its continued imports of discounted Russian crude, a move that has squeezed the economy and sparked debates on balancing energy needs with diplomatic relations.
This latest threat from Trump, who has made no secret of his dissatisfaction with India’s stance, comes amid growing calls for New Delhi to rethink its strategy in dealing with Washington.
For everyday Indians feeling the pinch of higher costs and job uncertainties, these trade tensions mean tougher times ahead, as key sectors like textiles, pharmaceuticals, and agriculture face barriers in one of the world’s biggest markets.
While Trump claims the measures aim to curb support for Russia’s actions in Ukraine, critics in India see it as unfair bullying that ignores the country’s energy demands in a world of rising fuel prices.
Trump’s Warnings and the Tariff Penalty Explained
President Trump has been vocal about his unhappiness with India’s oil deals, stating that Washington could raise tariffs “very quickly” if New Delhi fails to address US concerns.
He has mentioned that Prime Minister Narendra Modi was aware of his stance, hinting at behind-the-scenes talks that have not led to changes.
The current 50% tariffs on Indian goods heading to the US include the 25% penalty directly linked to Russian oil purchases, a policy rolled out through executive orders to pressure countries seen as aiding Moscow’s economy during its conflict with Ukraine.
India, one of the world’s top oil importers, turned to cheaper Russian supplies after Western sanctions on Moscow following the 2022 invasion of Ukraine.
This saved billions in energy costs, helping keep fuel prices stable for consumers and businesses.
But the move drew US ire, leading to the tariff hikes that have hit exports hard. Goods like steel, aluminium, and farm products now face higher duties, making them less competitive and costing exporters millions in lost sales.
Trump’s threats of further increases could push tariffs even higher, potentially to levels that cripple trade. He has approved measures like the Sanctioning Russia Act, which targets nations not aligning with US policies on Russian energy.
For Indian families, this means higher prices for imported goods and fewer jobs in export-driven industries, as companies cut back to cope with the squeeze.
Economic Impact on India and Key Sectors
The tariffs have already taken a toll on India’s economy, with exports to the US dropping by 15% in 2025 compared to the year before.
Sectors like textiles, which employ millions in states like Tamil Nadu and Gujarat, have seen orders dry up as American buyers turn to cheaper options from countries like Vietnam or Bangladesh.
Pharmaceutical firms, a pride of India’s manufacturing, face barriers too, delaying medicines and raising costs for US patients while hurting Indian workers.
The oil penalty adds another layer, as India imported over 1.5 million barrels a day from Russia in 2025, saving around $5 billion but inviting US retaliation.
This has forced refiners to look for pricier alternatives from the Middle East or Africa, pushing up domestic fuel prices and inflation.
Small businesses, already hit by global slowdowns, struggle with higher energy bills, leading to layoffs and closures in areas like manufacturing and transport.
Everyday people feel it in their wallets – a rickshaw driver in Mumbai shared how fuel hikes eat into his earnings, leaving less for food or school fees.
Farmers exporting rice or spices face lower profits, making it harder to invest in better tools or seeds.
The squeeze threatens India’s growth target of 7% for 2026, with experts warning of job losses in the millions if tariffs climb further.
India’s Response and Diplomatic Balancing Act
New Delhi has defended its oil buys as essential for energy security, pointing out that Europe also imports Russian gas despite sanctions.
Officials have held talks with US counterparts, seeking waivers or trade deals to ease the pain, but progress has been slow.
Trump has hinted at willingness to negotiate if India steps up on other fronts, like buying more US goods or joining alliances against China.
Critics at home say India’s handling has been too soft, allowing Trump to dictate terms without strong pushback.
Opposition leaders call for diversifying trade partners, like boosting ties with BRICS nations or the EU to cut reliance on the US market.
Economists suggest cutting red tape to make exports cheaper and exploring new markets in Africa or Asia to buffer against US pressures.
For the average Indian, these tensions feel far-off but hit close with rising costs. “We need leaders who stand up for us,” one Delhi shopkeeper said, worried about import prices.
The balancing act – cheap energy from Russia versus strong US ties – tests India’s foreign policy in a divided world.
Global Context and Similar Trade Disputes
Trump’s hard line on India fits his “America First” approach, seen in past tariffs on steel and aluminium that started in 2018.
Other countries like Canada and Mexico faced similar threats before deals were struck. For India, the oil penalty echoes US sanctions on Iran, where buyers like New Delhi got waivers but still felt the squeeze.
The US aims to starve Russia’s war machine by cutting oil sales, but India’s needs – importing 85% of its crude – make full compliance hard. This has led to creative workarounds, like paying in rupees or bartering, but tariffs bite back.
Globally, trade wars like this raise prices for everyone, with developing nations hit hardest as they juggle alliances and affordability.
In Africa, similar squeezes show up in energy deals, with countries like Nigeria facing US pressure over ties with Russia or China.
South Africans, with their own energy woes, watch closely as global politics affect fuel costs and jobs.
Looking Ahead: Potential Outcomes and India’s Options
As Trump pushes for more, India could face tariffs up to 100% on key goods if no deal is reached.
Experts predict talks ramping up in 2026, perhaps leading to a trade pact where India buys more US LNG or tech in exchange for relief. Diversifying oil sources, like from Saudi Arabia or the US itself, offers another path, though costlier.
For businesses, adapting means finding new markets or cutting costs, while government subsidies could ease the blow on consumers.
The squeeze tests India’s resilience, but with smart moves, it could turn pressure into progress for a stronger economy.
As relations strain, everyday people hope for quick fixes that keep prices stable and jobs safe.
Updates on talks will follow as leaders navigate this tricky path, aiming for wins on both sides.
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