Starting today, the United States has imposed 50% tariffs on Indian goods, surpassing those on China, which are about 30%. This US decision is partly a response to India's continued purchases of Russian oil. However, the volume of India-US trade remains modest, so the impact of these tariffs on India's economy is limited. Instead, India continues exporting oil products to the EU, prioritizing this premium market.
A key development is the EU's 18th sanctions package, which from 2026 will ban the sale of oil products made from Russian oil in Europe, except for pipeline deliveries. As a result, India's major refineries are shifting to Gulf oil for European exports while retaining Russian oil for domestic needs.
The hike in US tariffs has pushed India towards closer, though pragmatic, cooperation with China. Despite existing territorial disputes and tensions, both countries seek to challenge Western trade policies. The BRICS bloc, of which both are members, is thus gaining influence.
The pivotal factor for sanctions against Russia remains China's position. China is Russia's primary buyer of oil and key supplier of goods, often circumventing sanctions. While China values its trade with Europe, it hesitates to take sides overtly, balancing its interests. In October, as Russia faces growing budget deficits and depleted reserves, President Putin is expected to seek financial support from China. Whether China grants this stabilizing loan could significantly affect the geopolitical balance around the Russia-Ukraine conflict.
