Onmanorama Explains | US slashes tariffs on India to 18%. But will Russian oil purchases stop to avoid 25% punitive tariff?

US President Donald Trump on Monday announced that the United States would lower the reciprocal tariff imposed on Indian goods from 25% to 18%. But the declaration has triggered confusion, as Indian exports had effectively been facing a 50% duty from US until now.

While Trump referred only to a reduction in the “reciprocal tariff”, a White House official told Reuters that the US was also rescinding an additional 25% punitive duty imposed on India over its continued purchases of Russian oil. The penalty had been stacked on top of the 25% reciprocal tariff, taking the total levy to 50%. With the penalty withdrawn and the base rate lowered, the effective tariff now drops to 18%.

The announcement came after a phone conversation between Prime Minister Narendra Modi and President Trump, even as External Affairs Minister S Jaishankar travelled to Washington, DC. Government officials said the revised tariff gives India a competitive edge over rival export economies. They pointed out that US tariffs currently stand at 19% for Indonesia, 20% for Vietnam and Bangladesh, and 34% for China.

But the move has also raised questions over whether India has agreed to stop buying Russian oil and make wider trade concessions to Washington.

What Trump said India agreed to
In a post on Truth Social, Trump claimed that Prime Minister Modi had agreed to stop buying Russian oil and instead purchase significantly more energy from the United States and potentially Venezuela.

He also said India had committed to reducing tariffs and non-tariff barriers on US goods to zero, and to “BUY AMERICAN” at a much higher level, including more than $500 billion worth of US energy, technology, agricultural products, coal and other goods.

However, Trump’s post did not specify timelines for the lower tariff rate, a deadline for ending Russian oil purchases, or details of the proposed trade barrier reductions. The White House has also not issued a presidential proclamation or a Federal Register notice required to formally implement the changes.

What India said
Prime Minister Modi said he was delighted that Made in India products would now face a reduced tariff of 18%, but made no reference to oil purchases or broader trade commitments. Commerce and Industry Minister Piyush Goyal said the deal would bring the Indian and US economies closer, without offering further details.

What happens to India’s Russian oil imports
India has already been cutting back its purchases of Russian oil. The country imports around 90% of its crude oil needs, and discounted Russian oil has helped reduce import costs since Moscow invaded Ukraine in 2022 and Western nations imposed sanctions.

According to Reuters, India’s Russian oil imports stood at around 1.2 million barrels per day in January and are expected to fall to about 1 million bpd in February and 800,000 bpd in March.

Data from trade sources show Russian oil imports fell to a two-year low in December, while OPEC’s share of India’s imports rose to an 11-month high. Indian refiners have increasingly turned to Middle Eastern, African and South American suppliers. State-run Hindustan Petroleum, Mangalore Refinery and Petrochemicals and private refiner HPCL-Mittal Energy have already stopped buying Russian oil.

India has also resumed limited oil imports from Venezuela. Commerce Ministry data show India imported $255.3 million worth of Venezuelan oil in the current financial year up to November 2025, about 0.3% of total oil imports. Since 2019, India had to sharply cut purchases in response to US sanctions. In 2013, imports from Venezuela had touched $13 billion. If Venezuelan oil is offered at competitive prices, India could further reduce Russian imports, though such a shift could have implications for India-Russia ties.

Why the tariff cut now
The Trump administration is racing to finalise framework trade deals with major partners before the US Supreme Court considers whether to strike down Trump’s reciprocal tariffs under the International Emergency Economic Powers Act. The court is set to resume hearings on February 20.