U.S. oil sanctions hit India hard while China evades heat, sparking questions about fairness and inconsistency.
The US has tightened the screws on countries buying Russian oil, with India and China, the two largest importers since Europe scaled back purchases, feeling the heat. The US President, Donald Trump, has imposed a total 50% tariff on many Indian products, including furniture, dairy, textiles, gems, and automotive parts, as a response to India’s continued purchases of Russian crude oil.
These tariffs, justified under US national security and unfair trade laws, threaten India's export economy, where $87 billion of exports go to the US, representing about 2.5% of India’s GDP. The tariffs could potentially reduce India's GDP growth by 0.2-0.5% while risking significant job losses in key sectors like textiles (potentially 100,000 to 200,000 jobs in regions like Tiruppur alone).
The tariffs have also weakened the Indian rupee and increased borrowing costs for Indian companies with foreign debt, posing further economic challenges. Despite this, some sectors like IT services and pharmaceuticals remain exempt for now.
India's response has involved calls for negotiations, but also a degree of strategic defiance by continuing Russian oil imports. The discounts on Russian oil for India have shrunk to around $5 per barrel, making the cost-benefit calculation for Indian refiners less attractive under tariff pressure. India has sought to diversify buyers and suppliers to mitigate tariff impacts and maintains engagement with multilateral groupings like BRICS, which complicates its relationship with the US.
China, on the other hand, has generally benefited from tariff pressures on India by enhancing its competitiveness in shared export markets like textiles and manufacturing. Beijing watches the US-India dynamic closely, as tensions may shift regional trade balances to its advantage. While no new US tariffs on Chinese goods related to this specific issue have been announced in 2025, China maintains robust trade ties with Russia and continues to purchase Russian energy, benefitting from geopolitical shifts without facing the same US sanctions-style tariffs at this time.
Experts warn that if Russia’s 5 million barrels a day are choked off, the world could see a replay of the 2022 oil shock, with prices soaring and inflation following. The US tariffs on Indian goods imply significant economic costs for India, potential job losses, and strain in US-India trade relations, with India seeking strategic alternatives and negotiations while China indirectly benefits through competitive positioning in global markets.
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- The tariffs imposed by the US on Indian products, primarily in the industries of furniture, dairy, textiles, gems, and automotive parts, have sparked a debate in the realm of finance and politics, potentially impacting India's economic growth and job market.
- Despite facing a 50% tariff on its Russian oil imports, India has chosen to maintain its ties with Russia in the energy sector, a decision that involves strategic defiance and could lead to complications in its relationship with the US.
- While India grapples with the economic repercussions of US tariffs, China has capitalized on the situation, enhancing its competitiveness in shared export markets such as textiles and manufacturing, causing a shift in regional trade balances in China's favor.
