President Donald Trump can impose tariffs of up to 100% on countries purchasing oil from Russia, affecting China and India. The U.S. House passed a sanctions bill on Wednesday aimed at Russia, enabling Trump to target major buyers of Russian energy. This decision follows the BRICS Summit, where leaders, including those from China and India, criticized unilateral economic sanctions without directly naming the U.S. Deborah Elms, head of trade policy at the Hinrich Foundation, stated that the top five purchasers of Russian energy would be concerned about the potential application of this bill. The new authority could allow Trump to act swiftly against any nation for any reason.
China and India are particularly vulnerable, as both have significantly increased their purchases of discounted Russian crude since the onset of the Ukraine war in 2022. Experts noted that while tariffs may provide leverage for Washington in negotiations with New Delhi and Beijing, neither country is likely to reduce their Russian oil imports. Ronak D Desai, a visiting fellow at the Hoover Institution, indicated that Trump would likely use this tariff authority strategically.
India is currently in trade negotiations with the U.S. and is seeking a preferential rate compared to its competitors. Chinese President Xi Jinping is scheduled to meet with Trump later this month. Following the Hormuz crisis, the share of Russian oil imports by India and China has risen from one-fifth to one-third, with China accounting for half of Russia's crude exports as of the end of August, and India purchasing 37%.
Ivan Ryabov, head of oil trading analysis at Kpler, stated that it would be challenging for both countries to replace 3.5 million barrels per day of Russian seaborne supply. Analysts suggest that Washington is unlikely to escalate tensions with Beijing ahead of the upcoming summit, and China may disregard U.S. efforts to limit oil purchases. Martin Chorzempa, a Senior Fellow at the Peterson Institute for International Economics, noted that China would likely retaliate against any tariffs.
Dan Wang, China director at Eurasia Group, emphasized that Beijing would prioritize energy security and continue its imports from Russia. Stephen Olson, a visiting senior fellow with ISEAS Yusof Ishak Institute, remarked that the U.S. is unlikely to take actions that could disrupt the current situation.
Russia has been a major supplier of oil and natural gas to China, providing about one-fifth of China's crude imports and 10% of its natural gas consumption. Olson mentioned that the U.S. could find flexibility in the timing or scale of tariffs if they are implemented. Beijing may issue a statement opposing the bill but will likely wait to see the actual outcomes.
On Wednesday, Ukraine's sanctions envoy stated that Russia could be forced to retreat from the war within six months if its oil revenues were significantly reduced. He urged Asian governments to close loopholes that allow Russian tankers and weapons components to evade detection.
India's foreign ministry responded to the sanctions bill, affirming its commitment to ensuring energy security for its population. Experts expressed that India faces a challenging situation as it has not finalized a trade deal with the U.S. and relies heavily on Russian crude. Harsh Pant, vice president of studies and foreign policy at the Observer Research Foundation, noted that the public sentiment in India towards the U.S. has been declining, and the imposition of tariffs may exacerbate this trend.
Following the Iran war, India replaced Middle Eastern oil with supplies from Russia and Venezuela. Kpler data indicated that Russian oil constituted over 50% of India's crude purchases in June and July and more than 40% in August. Arpit Chaturvedi, South Asia advisor at Teneo, stated that the U.S. expects India to cease Russian oil imports, which would complicate India's economic decisions. The U.S. had previously imposed a 25% punitive tariff on India for purchasing Russian oil, which was later reduced to 18%. However, New Delhi has not confirmed the details shared by Trump regarding its oil purchases.