Indian fuel exports escape Trump’s tariff net

By Admin

02 Aug, 2025

In a world increasingly driven by geopolitical tensions and energy security debates, India has found a crucial escape hatch its fuel exports to the United States remain untouched by President Donald Trump’s latest tariff salvo.

Fuel Exports Stay Protected

Despite President Trump’s announcement of a 25% tariff on Indian goods, citing India's growing energy and defense ties with Russia, a crucial exception has been made for petroleum products, including diesel and jet fuel. As per the executive order, India’s refined fuel exports, along with pharmaceutical products and electronics, are excluded from this sweeping tariff.

This exemption has significant economic implications, particularly considering India exported 4.86 million tonnes of petroleum products worth over $4 billion to the US during the 2024–25 fiscal year. Reliance Industries Ltd, India’s energy powerhouse, remains the largest fuel exporter to the US, and will continue operations uninterrupted at least for now.

Russia’s Influence on India’s Oil Landscape

India’s growing dependence on Russian crude oil remains a key concern in US foreign policy circles. Since Russia’s invasion of Ukraine in February 2022, India's share of Russian oil imports surged from a meagre 0.2% to 35–40%, overtaking traditional suppliers like Iraq and Saudi Arabia.

Backed by heavy discounts once as high as $40 per barrel compared to Brent India capitalized on lower prices to refine and re-export petroleum products. In July 2025, India imported 1.8 million barrels per day (bpd) from Russia, nearly double the 950,000 bpd from Iraq and significantly more than the 630,000 bpd from Saudi Arabia, according to data by Kpler.

No Penalty Yet, But Caution Prevails

While Trump announced a tariff plus penalty regime, aimed at curbing India’s trade with Russia, the executive order did not implement any penalty for Russian energy purchases. Analysts interpret this as a temporary reprieve, but warn that it may not last. “For now, there is nothing, but you never know,” one expert commented.

India's strategic buying has not only boosted its economic advantage but also helped refiners profit by selling refined fuels to regions like the European Union, which had earlier banned direct Russian crude imports. In fact, the EU has now moved to ban even refined products made from Russian oil further complicating the global energy landscape.

Geopolitical Risks and Economic Strategy

Trump’s criticism is rooted in India’s long-standing defense and energy alignment with Russia. In his social media post, Trump accused New Delhi of being Russia’s largest energy buyer alongside China, at a time when global powers want Moscow to “STOP THE KILLING IN UKRAINE.”

Despite the pressure, India has so far managed to balance its energy security needs, economic interests, and diplomatic positioning. With fuel exports remaining tariff-free, companies like Reliance and other private refiners continue to benefit from this strategic niche.

Conclusion: Business as Usual, For Now

India has skillfully navigated the crosscurrents of global sanctions and trade tensions. While Trump’s 25% tariff may cast a shadow on broader India-US trade, the exemption of fuel exports ensures business as usual for the petroleum sector. However, as geopolitical equations evolve, New Delhi must remain agile to shield its energy trade and leverage diplomatic channels to maintain this crucial lifeline.