Trump renews tariff threat: Can raise tariffs on India ‘very quickly, says US president

US President Donald Trump has warned India of increasing the tariffs further quickly if it does not stop crude oil purchases from Russia which continue even after 50% additional import duties.

Adding to US senator Lindsey Graham’s comments that because of tariffs India is buying substantially less oil from Russia, Trump said “they (India) wanted to make me happy basically.”

Trump on his equation with Modi

“Modi is a good guy. He knew I was not happy and it was important to make me happy. They do trade and we could raise tariffs on that very quickly and it would be very bad for them,” Trump said.

“I was at the Indian ambassador’s house about a month ago. And all he wanted to talk about is how they are buying less Russian oil,” Graham said, adding that the “ambassador also asked him to tell the President to relieve the tariff. So this stuff (tariffs) work.”

500% Tariff on purchase of Russian oil?

Graham is sponsoring a tariff bill that would impose a 500% tariff on imports from any nation that purchases Russian oil, gas, uranium and other products.

The 25% additional tariffs on India for Russian oil purchases came in late August but Russia continues to be the single biggest supplier of crude to India. In November it accounted for 34% of India’s crude oil imports. 

Following the tariffs the US president sanctioned two biggest Russian companies – Rosneft and Lukoil – on 22 nd October. On November 20 Reliance announced that it would stop buying Russian oil for its export-focussed refinery. Since then it has started buying crude oil from Russian entities that are outside the sanctions to supply the local consumption, according to a Bloomberg report.

The Indian government did not respond to the US president’s latest remarks.

According to experts, even if the orders for Russian crude from India would have reduced, supplies would continue for next few months as old purchases for which the payments have been made would reach Indian ports with a time lag.

While Russian crude oil landings continued at the previous pace, India has ramped up purchases from the US in November substantially 

The 50% tariffs – 25% for addressing trade imbalance and 25% for Russian oil – from August-end led to decline in India’s exports to the US in September and October. In November the shipments recovered sharply and grew 22% on year to $ 6.98 billion.

As threats from the US President continue, India and the US have had ongoing negotiations on a Bilateral Trade Agreement (BTA) since March last year. Six rounds of negotiations and many meetings have taken place between the top trade leadership of both countries to arrive at a trade agreement. The Indian side is looking for reduction of additional tariffs in the first phase and then continuation of negotiations on a broader trade pact.

Officials on both sides have said on numerous occasions that the talks on the deal are in final stages and could be concluded at the earliest. The last high-level engagement between the two sides happened in December 9-10 when a delegation from the office of US Trade Representative (USTR) led by Deputy USTR Rick Switzer accompanies by Assistant USTR Brendan Lynch visited New Delhi for two days of talks. No dates of next set of meetings have been announced though the Indian side remains hopeful of an agreement.

India’s crude oil imports from Russia and US in April-November

Share of Russia in crude oil imports in November: 34.01%

Share of US in crude oil imports in November: 13.19%

Share of Russia in crude oil imports in April-November: 32.40%

Share of US  in crude oil imports in April-November: 13.19%