US Senator Lindsey Graham said, “We will crush your economy.” Furthermore, he warned that the President of the US might impose a 100% tariff on oil transport for helping Russian President Vladimir Putin. Not only India, but also countries like China and Brazil are also warned in case they continue importing oil from Russia. However, Russia accounts for over 35% of India’s crude oil supply. But what makes the U.S. focus on increasing tariffs on oil transport? Let’s dig deeper.
What Triggered the Warning?
Along with China and Brazil, India is also one of the major buyers of Russian oil. And has significantly increased its imports of Russian crude since 2022. Thus, from the beginning, the country has been taking advantage of discounted prices amid Western sanctions. The purchase is beneficial for Russia, providing them with vital revenue, which the U.S. and its allies argue indirectly supports the war in Ukraine. Also by targeting India, the U.S. is sending a warning—support for Russian energy may come with economic consequences.
Why Is the United States Concerned?
The United States and its allies have imposed sanctions on Russia since the beginning of the conflict in Ukraine. The goal of these sanctions is to lessen Russia’s capacity to profit from the export of gas and oil. However, this effort is undermined by India’s import of cheap Russian crude. Unaware that it originated from Russian oil, the US purchases refined fuel from India. This calls into question the sanctions’ efficacy.
The statement made by Senator Graham reflects growing dissatisfaction among US lawmakers. They now believe that India is essential to the survival of Russia’s oil sector. He made it clear that if India doesn’t behave differently, the US might take aggressive trade action.
A 100% Tariff: What Is It?
India’s oil exports to the US will cost twice as much if the US imposes a 100% tariff. For American importers, the tariff will raise the price of refined fuel to $6 if a gallon currently costs $3. Indian fuel will become less competitive in the US market as a result of this action.
Indian refiners will suffer the most from the tariff. By refining and exporting cheap Russian oil, they have made significant profits. However, these refiners will lose their primary customers if the US increases tariffs. Additionally, it will raise the cost of fuel globally, particularly in nations that depend on imported gasoline and diesel.
How will this impact India?
India can come under severe economic stress if the tariff is imposed by the US. Giant Indian firms such as Reliance Industries and Indian Oil Corporation process huge amounts of Russian oil. These firms supply refined fuels to Western nations, including the US. The 100% tariff will compel Indian refiners to look for new customers. But the majority of other nations cannot take such massive volumes. This can create a surplus in Asia, and that can reduce profit levels.
It would also damage India’s export revenues and reduce growth in the energy sector. India can also be diplomatically pressured. India and the US have close trade, defense, and technology relationships. But energy trade can be a source of friction. If India does not discontinue relations with Russian oil, America can begin reassessing other aspects of their relationship as well.
Conclusion
The threat by the United States to impose a 100% tariff on oil shipping from India represents a fresh escalation of the economic and geopolitical consequences of the Russia-Ukraine war. While India has gained economically from cheap Russian oil, such a tactic now threatens to attract dire backlash from its Western partners, especially the US. Senator Lindsey Graham’s threat is a reflection of increased American irritation at the sabotage of sanctions to sap Russia’s war economy.
If imposed, such a tariff would upend the profitability of Indian oil refiners, strain export revenues, and alter global energy trade patterns. Moreover, it could put India in a tricky diplomatic situation—caught between asserting strategic autonomy and risking undermining its larger relationship with the US. Ultimately, this clash serves to expose an underlying conflict between national energy interests and international political relationships. For India, the way ahead will necessarily consist of subtle diplomacy, possible diversification of its energy sources, and an adjustment of its foreign policy stance in a world of growing global polarization.
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