India's Double Blow: Tariffs and Crude Price Shock
India could face a double blow from the US's new legislation allowing President Donald Trump to impose up to 100% tariffs on goods from countries that import significant amounts of Russian oil and gas. The bill, which was passed by an 86-11 vote in the US Senate, targets India, China, Azerbaijan, Hungary, and Slovakia.
The potential impact on India's $80 billion merchandise exports to the US market is significant, with Sachin Gupta, Chief Rating Officer at CareEdge Ratings, warning that a 100% tariff could make large parts of these exports commercially unviable. 'If there is indeed a 100% tariff, these items will become uncompetitive, and there will be no takers in the US market,' he said.
The larger risk for India, however, comes from its dependence on Russian crude oil. If Indian and Chinese refiners are forced to cut purchases from Moscow due to sanctions, a substantial volume of crude could be removed from global trade, potentially triggering a sharp price shock. Crude prices could jump significantly, with Gupta predicting that they may reach $110-$120 a barrel or higher.