Why Trump levied penalty tariff on India, not on China: Even US is confused

With contradictory statements from top US officials, the rationale of tariffs on India is under question.

President Donald Trump has slapped India with 50 per cent tariffs on India as a punishment for buying Russian oil. But he has not imposed any tariffs on China, which has consistently bought more Russian oil than India.

Treasury Secretary Scott Bessent and Secretary of State Marco Rubio have justified with contradictory statements that leads to the question: Does the Trump administration even have a policy-based objective for tariffs on India or is Trump taking out frustration on India or acting out of a grudge?

“They [India] are just profiteering. They are reselling. This is what I would call the Indian arbitrage — buying cheap Russian oil, reselling it as product,” Bessent told CNBC, adding that India has made $16 billion in “excess profits”.

Contradictory statements on Russian oil purchases

Bessent on Tuesday said that tariffs were slapped on India because India was refining Russian crude oil and selling it elsewhere and profiting from it. But Rubio on Sunday said China was doing the same thing and that was why there were no tariffs on the country.

“China just refines that oil [Russian oil]. That oil is then sold into the global marketplace and anyone who’s buying that oil would be paying more for it or if it doesn’t exist, would have to find an alternative source for it,” Rubio told Fox News.

The fact remains that China and India keep the international prices of oil in check with the purchase of Russian oil by, firstly, absorbing the Russian supply, and, secondly, refining Russian crude and selling gasoline and diesel elsewhere at lower prices. While Bessent said that this refining and subsequent selling was the basis of tariffs on India, Rubio said that this was the basis for not imposing tariffs on China.

However, going by Rubio’s logic, there should not be any punitive tariff on India. And, as per Bessent’s logic, there should be tariffs on China just like India.

Notably, Russia has consistently bought more Russian oil than India — nearly half of all Russian exports.

As Indian purchases of Russian oil stabilised the international oil prices, the previous Joe Biden administration of the United States had encouraged India to buy Russian oil and even refine and sell it elsewhere — the same rationale that Rubio has used for China now.

The Biden administration had asked India to accept Russian crude as other countries imposed bans in order to prevent a major oil price spike after the invasion of Ukraine that would result in high gasoline prices in the United States, Bob McNally, the President of Rapidan Energy, told CNBC.

“India played a key role in the price cap sanction mechanism designed by the US and its European allies to ensure Russian oil still flowed while trying to crimp the revenue Moscow earned,” McNally said.

However, as Trump has aligned himself with China and has pursued an overt campaign against India, which has ranged from economic warfare to an alliance with India’s adversaries in the region, he has flipped the understanding reached between the two countries in the previous administration.