A Shift on Oil and Imports
President Donald Trump said on Monday that the United States will reduce tariffs on Indian goods to 18%, down from 25%, after Indian Prime Minister Narendra Modi agreed to stop buying Russian oil. Trump said the deal also includes India lowering import taxes on U.S. products to zero and committing to purchase $500 billion worth of American goods.
Trump framed the move as part of his broader push to end the war in Ukraine, arguing that cutting off Russia’s oil revenue would weaken Moscow’s ability to keep fighting. Posting on Truth Social, he said the agreement would help bring an end to a conflict that continues to claim thousands of lives each week.
Modi welcomed the announcement, calling Trump’s leadership vital for global stability and describing their phone call as “wonderful.” However, Modi did not directly address Trump’s claim that India would halt Russian oil purchases.
Trade Pressure and the Ukraine War
India’s continued purchases of discounted Russian oil have been a sticking point for Washington since the start of the Ukraine war in 2022. As Europe sharply reduced imports, India emerged as one of Russia’s largest buyers, sourcing about 36% of its crude oil from Russia in 2024 — roughly 1.8 million barrels a day.
Trump has repeatedly argued that targeting oil revenues is the fastest way to pressure Russian President Vladimir Putin. While he pledged during his campaign to end the war quickly, progress has been slow, and Trump has relied heavily on tariffs as both an economic and foreign policy tool.
Later this week, Trump’s special envoy Steve Witkoff and son-in-law Jared Kushner are expected to take part in fresh talks with Russian and Ukrainian officials in Abu Dhabi, as the administration looks for a diplomatic breakthrough.
Tariffs, Trade Deals, and Global Realignment
The tariff rollback follows months of pressure on India. In June, Trump announced a 25% tariff on Indian goods over trade imbalances, then added another 25% in August tied directly to India’s Russian oil purchases. With the latest agreement, both penalties are expected to be lifted, bringing India’s tariff rate closer to those applied to the EU and Japan.
The timing is notable. Just days ago, India and the European Union finalized a sweeping free trade agreement after nearly 20 years of talks, opening markets across textiles, medicines, wine, and automobiles. India has also recently struck trade deals with Oman and New Zealand as it accelerates efforts to diversify its economic partnerships.
While India’s long-standing relationship with Russia has traditionally centered on defense rather than energy, the Ukraine war created an opportunity to buy cheap oil. Trump’s latest deal signals a recalibration — one that reshapes trade ties while tying India more closely to U.S. economic and geopolitical goals.
