Trump has imposed additional tariffs on India because the country buys Russian oil. This means that imports from India to the US will be taxed at a total of 50% - one of the highest rates introduced by Washington. New Delhi described the decision as "unfair, unjustified and unreasonable".
China also reacted sharply to Trump's threats of sanctions because of Beijing and New Delhi's dependence on Russian energy supplies, which de facto finance the Kremlin's aggressive war against Ukraine.
India and China have increased their purchases of Russian oil many times over
Both countries have announced that they will defend their energy security and economic sovereignty. China, which has been the largest importer of Russian oil since 2023, described the US policy as "coercion and pressure". India accused the West of hypocrisy and recalled that the European Union continues to import Russian energy, although it has seriously limited its dependence on it since the beginning of the war. According to New Delhi, Washington has actively supported the purchase of oil from Russia in order to stabilize prices on international markets.
Over the past four years, India's purchases of Russian oil have increased almost 19 times - from 0.1 to 1.9 million barrels per day, while China's have increased by 50% to 2.4 million barrels per day.
Petras Katinas, an energy expert from Lithuania, told DW that India, which is the second largest buyer of oil from Russia, has saved up to $33 billion between 2022 and 2024 from this trade, as Moscow has offered it large price cuts after the US and Europe reduced their dependence on Russian oil and gas.
India's long-standing policy has been to balance its relations with the US, Russia and China. This policy has also predetermined the decision to buy Russian crude at lower prices, as New Delhi "prioritizes energy security and affordable prices," says Katinas.
A heavy blow to India and Russia, but also higher prices worldwide
After Trump imposed additional tariffs on India, oil prices increased by nearly 1%, and Indian media reported that the new tax could increase the country's oil costs by up to $11 billion. Trump is expected to announce additional sanctions on other trading partners of Russia.
The additional sanctions will deal another blow to the Russian economy, which is already suffering from Western restrictions. Military spending exceeds 6% of GDP, and real inflation, according to some experts, is around 15-20% - double the official government figures, which say it amounts to 9%.
And in global markets, the new sanctions could cause a seismic shock in energy prices and trade - similar to the one in 2022, when the price of oil soared and Russia bypassed Western sanctions, concluding profitable energy deals with two of the world's largest economies.
"If India had not bought Russian crude (in 2022), no one can guess what the price of oil would have been - $100, $120, $300", Sumit Ritolia, an oil analyst in New Delhi, told DW. In the weeks before the invasion of Ukraine, the price of US crude oil "West Texas Intermediate" (WTI) fluctuated between $85 and $92 a barrel.
The 25 percent additional tariffs imposed by Trump will now likely force India to limit at least some of its trade with Russia. More sanctions will only aggravate the situation.
Russian oil cannot be replaced quickly
Katinas said that the secondary sanctions significantly raise the stakes, "threatening Indian companies' access to the US financial system and exposing banks, refiners and transport companies to serious risks given their integration into global markets".
Russia produces about 5 million barrels a day, and if they suddenly disappear from world markets, oil prices would soar again. Although OPEC has recently increased its production, it will be extremely difficult to compensate for such a large volume in the short term.
According to Sumit Ritoliya, it may take Indian companies a whole year to replace Russian oil. Higher crude prices will lead to a sharp rise in inflation - both in the United States and globally. The US Federal Reserve estimates that every $ 10 increase in the price of crude oil adds about 0.2 percentage points to inflation in the United States. The Reserve Bank of India has reached a similar conclusion.
If prices rise from the current $ 66 to $ 110-120 per barrel, inflation will rise by about 1 percent, which will lead to an increase in costs for consumers and businesses, especially in the areas of energy, transportation and food.
China has much greater bargaining power
Katinas notes that China, whose total trade with the US is more than four times that of India, "could be excluded" from the new US measures. With more than $580 billion in trade between the world's two largest economies, China has a bargaining chip that India does not.
China's control over rare earths supplies - a persistent source of tension in US-China relations - could serve as another lever Beijing could use to soften Trump's stance.
With India lacking such leverage, Trump doubled down on New Delhi earlier this week, saying the likely impact of his new sanctions on Russia and India would "destroy their dead economies".
Will India back down?
Meanwhile, India is no longer enjoying the same favorable terms for Russian oil that it enjoyed in 2022. Back then, the discounts ranged from $15 to $20 a barrel; today, they are only around $5, explains Sumit Ritolia.
Eager to fund its military budget, Russia is aggressively increasing its energy revenues - not least thanks to growing demand from Turkey, the third-largest consumer of Russian oil, as well as from across Asia, where Russian crude is being re-exported to circumvent US sanctions.
Nevertheless, Indian refiners continue to buy. Imports hit an 11-month high in June this year at 2.08 million barrels per day, accounting for 44% of India's total crude oil imports.
While Beijing views oil imports as a priority that is largely shielded from political pressure, India is likely to be more willing to back down - to reduce its purchases if pressured, but without completely abandoning Russian oil.
Author: Nick Martin