Editorial: India faces another tariff blow

Trump’s new tariff move could raise energy costs, hurt exports, affect economic growth and strain trade ties

Tariffs are the new weapons of modern trade wars. United States President Donald Trump has been using this weapon to bully foes and friends alike. India, which has been bearing the impact of his tariff tantrums, is up for another challenge now. The US House of Representatives has given Trump another weapon to launch a fresh tariff war and disrupt global trade. It passed the ‘Lindsey O Graham Sanctioning Russia and Iran Act of 2026’ by 262–159, empowering Trump to impose tariffs of up to 100 per cent on buyers of Russian oil. The Bill is designed to squeeze Russia’s revenue from oil and gas exports amid the war in Ukraine. However, this legislation could have major implications for India’s economy and oil markets, as Moscow remains a major supplier of crude oil to New Delhi. It could also have implications for the US-India trade ties if Trump imposes further levies. A 100 per cent tariff would severely hit Indian manufacturing sectors—including textiles, electronics, and gems—by destroying price competitiveness in the vital American market. India has saved billions by importing discounted Russian crude oil, which helps stabilise domestic inflation for its 1.4 billion citizens. However, these energy savings risk becoming a liability if the US levies massive export penalties. It is estimated that a full-scale tariff implementation could knock nearly 0.8 per cent off India’s GDP growth over the next couple of years. India currently imports 88 per cent of its crude requirements, with Russia being one of its major suppliers.

In fact, when Moscow began its full-scale invasion of Ukraine in 2022, Russian crude oil became a significant part of India’s crude import basket. According to data from the Global Trade Research Initiative (GTRI), India imported $40.8 billion worth of Russian crude in FY2026 — nearly a third of its total crude imports. It must be pointed out that India buys Russian oil to secure affordable energy for the country, not to finance any war, and these purchases have helped stabilise global supplies and prices. If the Trump administration goes ahead with imposing a 100 per cent tariff, it would be in addition to the 10 per cent that America currently imposes on imports from India as a penalty for not doing enough to stop the import of goods made using forced labour. The Bill is a dangerous attempt to pressure India to sign a bilateral trade agreement on one-sided terms. India has built some insulation against shocks from US tariffs through new trade deals with key markets in the EU and elsewhere. But the threat of 100 per cent tariffs from a critical export destination could deal a big blow. The impact would be felt through Indian exporters, the rupee, refinery margins and the trade balance. India can find alternatives to Russian crude, but replacing it at scale would come at a price.

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