India Caught in US Tariff Crossfire on Russian Oil and China’s Advantage

India faces tariff pressure from US, strategic disadvantage against China

India’s energy strategy has come under fresh strain as US President Donald Trump’s secondary tariffs on Russian oil imports take effect from August 27. The additional 25 per cent duty on India’s purchases has sparked concerns in New Delhi that the country is being unfairly targeted in Washington’s attempt to squeeze Moscow’s oil revenues and force it into peace negotiations over the Ukraine war.

External Affairs Minister S. Jaishankar expressed surprise over the new tariff, noting that it was the United States that initially encouraged India and others to buy Russian oil to help stabilise global energy markets. Speaking in Moscow alongside Russian Foreign Minister Sergey Lavrov, Jaishankar underlined India’s position that its crude imports are driven by affordability and energy security, not geopolitics.

However, policy experts believe India has become a “soft target” for Washington. According to analyst David Woo, former head of global research at Bank of America, squeezing Russia’s oil revenues is seen in Washington as the “cheapest and easiest way to weaken Moscow.” With political sensitivities around directly targeting China, the burden of secondary sanctions has fallen disproportionately on India.

The US Treasury has also sharpened its criticism. Treasury Secretary Scott Bessett accused India of profiteering through what he termed “the Indian arbitrage,” where discounted Russian crude is refined and exported as petrochemicals. He argued that the benefits are flowing to “the richest families in India,” framing the issue as both geopolitical and economic.

Meanwhile, China is set to gain from the shifting trade landscape. With fewer restrictions on its imports and stronger leverage in negotiations with Moscow, Beijing is positioned to secure Russian oil on more favorable terms. This could leave India facing both higher costs and fewer options, presenting what analysts call a “Hobson’s choice” — accept disadvantageous terms or risk severe energy shortfalls.

For India, the dilemma resembles a geopolitical game of chicken. Either continue buying Russian oil and absorb the costs of US tariffs, or cut back and lose access to a crucial energy source while China consolidates its advantage. With stakes rising, the next phase of India’s energy diplomacy will be critical in balancing affordability, security, and strategic autonomy.