US Proposes 500% Tariff on India for Russian Oil Imports: Impact and Response

Published on: July 7, 2025

Current Status of the Proposal

As of July 2025, the bill remains pending in the US Senate but has garnered significant support, with 84 senators backing it. Discussions are expected to resume in August 2025. If passed, the tariff could drastically impact India, which imports 40-44% of its crude oil from Russia at discounted rates.

India’s Response and Trade Negotiations

India has expressed concerns over the proposed tariff. External Affairs Minister S. Jaishankar has engaged with US officials, including Senator Graham, emphasizing India’s energy security needs. India and the US are negotiating a phased trade agreement, with the first phase expected to conclude by October 2025, potentially mitigating the tariff’s impact.

Potential Impact on India

A 500% tariff could severely affect India’s exports to the US, particularly in textiles, pharmaceuticals, chemicals, and IT services, as costs rise and demand falls. Currently, a 26% tariff is in place, with a 90-day suspension until July 9, 2025. Failure to secure a trade deal could reinstate this tariff, with the 500% tariff looming if the bill passes.

Conclusion

The proposed 500% tariff poses a significant challenge for India, balancing its energy needs with US trade relations. The coming months, particularly August 2025, will be crucial as India navigates these negotiations to protect its economic interests.

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