Trump says Russia has lost India as an oil client, secondary tariffs will be devastating

US President Donald Trump said that Russia has lost India as an oil client, while also suggesting that the United States may not immediately impose secondary sanctions on China.

In an interview with Fox News aboard Air Force One, Trump remarked, “Well, they lost an oil client so to speak, which is India, which was doing about 40% of the oil. China, as you know, is doing a lot…And if I did what’s called a secondary sanction, or a secondary tariff, it would be very devastating from their standpoint. If I have to do it, I’ll do it. Maybe I won’t have to do it.”

Trump’s comments come after he recently threatened to take the total tariffs on India to 50% after imposing an additional 25% tax on imports from New Delhi starting August 27.

The White House cited national security and foreign policy concerns, stating that India’s imports of Russian oil pose an “unusual and extraordinary threat” to the United States.

The order covers all Indian goods imported into the US, except items already in transit or meeting specific exemptions.

India’s response

New Delhi has strongly objected to the move. The Ministry of External Affairs (MEA) in its statement said, “The United States has in recent days targeted India’s oil imports from Russia. We have already made clear our position on these issues, including the fact that our imports are based on market factors and done with the overall objective of ensuring the energy security of 1.4 billion people of India.”

“It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest. We reiterate that these actions are unfair, unjustified and unreasonable. India will take all actions necessary to protect its national interests,” the MEA added.

Secondary sanctions debate

While speaking about the potential of broader penalties, Trump hinted that Washington could extend similar measures to China as well. “Could happen. Depends on how we do. Could happen,” he said when asked if tariffs could be raised against Beijing.

Earlier, US Treasury Secretary Scott Bessent had warned that if talks between Trump and Russian President Vladimir Putin did not yield results, secondary sanctions on India could be expanded. In his words, “We put secondary tariffs on the Indians for buying Russian oil. And I could see, if things don’t go well, then sanctions or secondary tariffs could go up.”

Bessent also noted that sanctions could be increased, relaxed, or extended indefinitely depending on future developments.

Trump made the remarks while travelling to Alaska for a summit meeting with Putin. The talks concluded without any agreement on ending the Russia-Ukraine war.

India’s oil imports from Russia
India’s crude oil imports from Russia rose to 2 million barrels per day (bpd) in the first half of August, up from 1.6 million bpd in July, reported PTI, citing energy data provider Kpler. The increase lifted Russia’s share to 38% of India’s overall 5.2 million bpd crude imports in the period.

The higher intake came largely at the cost of supplies from Iraq and Saudi Arabia. Imports from Iraq declined to 730,000 bpd in August from 907,000 bpd in July, while Saudi volumes dropped to 526,000 bpd from 700,000 bpd. The US ranked fifth with supplies of 264,000 bpd.

India, the world’s third-largest oil importer, has sharply increased purchases from Russia since the Ukraine war in February 2022. Russian oil, which earlier accounted for less than 0.2 per cent of India’s imports, now makes up 35–40% of crude intake.

While discounts had previously touched as high as USD 40 per barrel, they narrowed to USD 1.5 last month. Discounts this month have improved slightly to over USD 2 per barrel, according to Kpler data.

Source: Economic Times
--Agencies