Trump Threatens India With Secondary Sanctions Over Russian Oil Purchases. What Next?

Trump, whose actions are regularly driven by his (often mistaken) perceptions of weakness in other parties, has decided to have a go at India over its purchases of Russian oil. The fact that so far, India is the only country singled out for this treatment suggests that Trump thinks he is engaging in “Kill the chicken to scare the monkey” behavior, that by punishing India, he can get others to fall into line without implementing additional secondary sanctions. Many experts have pointed out, much like the shock and awe sanctions that the Collective West imposed on Russia, that imposition of secondary sanctions on major trade partners, particularly China, have good odds of damaging the US more than the target.

India appears to have no intent of backing down. Keep in mind that even though India does not export Russian crude (India does not export oil at all), it is widely believed to export products from refined from Russian oil, particularly to Europe. However, as we’ll discuss, the Trump plan is putting pressure on some unresolved issues in Indian-Russian oil trade, beyond the fact that India will seek a further discount on its energy buys beyond the one it is getting now. A new interview of John Helmer by Dimitri Lascaris gives considerable insight into the India reaction and likely next steps. In particular, Helmer discusses unresolved Russia-India payment systems issues at some length.

First, an overview of the Trump threat from Bloomberg:

President Donald Trump said he would be “substantially raising” the tariff on Indian exports to the US over New Delhi’s purchases of Russian oil, ramping up his threat to target a major trading partner…

Trump’s post did not specify how much he would raise the levy by. Trump last week announced a 25% rate on Indian exports, shocking New Delhi after months of negotiations failed to secure a breakthrough. He also threatened more action if India continued to buy oil from Russia…

India has been a top Trump target in the campaign to bring an end to the war in Ukraine. New Delhi has been defiant, however, with Prime Minister Narendra Modi — who has had warm relations with Trump in the past — responding to the US president’s threat by urging Indians to buy local goods and signaling that his administration will continue to buy Russian oil.

Modi’s government hasn’t given Indian oil refiners instructions to stop buying Russian oil, and no decision has been taken on whether to halt the purchases, people familiar with the situation told Bloomberg

Trump may have been advised that India was vulnerable to US pressure due to the US being India’s largest trade partner. However, China and the UAE rank as more important export destinations than the US, reducing American leverage. From the World Bank:

An OilPrice story published after the Trump hissy headlined that India Continues Russian Oil Imports Despite U.S. Sanctions. It did say there had been a pause in deliveries.

India’s formal response was polite and logical, not that that matters to Trump.¹ A cornerstone of their case was that energy supplies had been diverted to Europe after the Special Military Operation started and noting a bait and switch. Per the Financial Times:

Randhir Jaiswal, spokesperson for India’s foreign ministry, said in response to Trump’s Truth post: “The targeting of India is unjustified and unreasonable…

“The United States at that time actively encouraged such imports for strengthening global energy markets stability.”

The pink paper also noted:

Last year, Russia supplied India with one-third of its crude oil imports, or about 550mn barrels. The US, by contrast, sent just 52mn barrels during that period, according to data from data provider LSEG.

The EU seems to believe that it is loaded for bear. From Politico’s morning European newsletter:

PUNISHING CHINA AND INDIA: Patience is running thin with China and India as the world’s most populous countries continue to fuel the Russian economy/war machine.

Throwback Tuesday: Both Brussels and Washington appear to be moving in the same direction, plotting sanctions against Beijing and Delhi…It’s a whiff of old-school Western alignment that feels downright retro.

TRUMP ADDS INJURY TO INDIA: After failing to reach a trade deal with Delhi, Trump is claiming moral authority to dish out even steeper duties….

EU SANCTIONS COMING FOR BEIJING: Separately, Brussels is preparing to push for sanctions against China over its involvement in supporting Russia’s war on Ukraine….

Context: The move follows a July Reuters report that Chinese-made drone engines have been covertly shipped to Russia via front companies, labeled as “industrial refrigeration units” to evade Western sanctions.

Escalating involvement: The exposé triggered alarm in Brussels. Fifteen EU countries have confronted Beijing about the shipments, but China has either denied involvement or refused to respond. “The report is accurate and it shows China is escalating its role, both quantitatively and qualitatively,” the diplomat said. “It’s fair to say that without Chinese support, the war would look very different right now.”

What’s next: According to the diplomat, the EU has been aware of Chinese drone transfers to Russia since before reports surfaced. “After August, we’ll push for sanctions,” the diplomat said, warning that the bloc shouldn’t underestimate its economic leverage. “We want dialogue, but also action.”

ABOUT THAT ECONOMIC LEVERAGE … Chinese tech giant Baidu and Lyft, an American ride-hailing service, are teaming up and plan to start operating Chinese-built driverless cars in Germany and the U.K. next year, they announced Monday. Uber and Momenta shared similar ambitions earlier this year. As the New York Times’ Keith Bradsher notes, the Chinese EVs are still the cheapest available despite the EU’s harsh tariffs.

This is pathetic. So the EU can bar Chinese expansion into the EU, when China can cut of rare earths and other critical tech product inputs?

Back to India. Readers may recall that Indian Minister of External Affairs Jaishankar has repeatedly maintained that India has the right to buy oil at the cheapest price, and that that is particularly important for India given how many Indians are poor:

#WATCH | We have seen that India-Russia relationship has worked to advantage so if it works to my advantage I would like to keep that going: EAM S Jaishankar during a press briefing, in Moscow on Russian oil imports pic.twitter.com/ddcB7ryAfH

— ANI (@ANI) November 8, 2022

Quite a few comments on Twitter challenged the idea that Indian citizens were benefitting from discounted Russian oil:

Buying Russian oil is our choice though that is the bone of contention now between India and USA.

But the irony is Indian citizens got no benefit from this cheap import of oil from Russia. We are still paying a very high price of fuel.

Don't know who all got benefit from…

— D.Muthukrishnan (@dmuthuk) August 4, 2025

However, this is an interesting take, even though one would have to get a lot more granular to evaluate second-order effects:

For India, losing 100% exports to the US (not 25% tariff, losing 100% exports) would have about the same effect as stopping buying oil from Russia. https://t.co/n5AOk7yvxp pic.twitter.com/GzfNCXEABd

— Nik Stankovic (@nikstankovic_) July 31, 2025

Now to the detail from Helmer on what India’s next moves are likely to be. From his talk with Dimitri Lascaris, staring at 20:55:

Helmer: As I mentioned at the outset, we’re about to see apparently the imposition of massive, sanctions on buyers of Russian oil. Two of the largest, of course, are the People’s Republic of China and India.

The Chinese government has been adamant that these new sanctions, secondary sanctions as we lawyers refer to them, will not deter it from purchasing Russian oil.

As for India, Trump stated a couple of days ago that he understands that India will stop buying Russian oil. But Trump seems to be talking again out of his rather large derrierè. Official sources in India, quoted by the news
agency ANI, said Indian oil companies had not paused Russian imports and that supply decisions were based on quote price, grade of crude, inventories, logistics, and other economic factors close quote.

Lascaris: Now, um, John, I personally find that statement ambiguous because other economic factors could include new sanctions being imposed by the United States government. So it’s it’s not entirely clear to me that that statement indicates that India will uh proceed with business as usual although I think probably that’s what it intends to do. what do you understand uh India’s position to be with respect to purchases of Russian oil and if in fact you agree uh with this uh assessment that it’s going to continue with business as usual um how do you think this is likely to impact uh Mod’s the Modi government’s attitude towards the Trump administration?

Helmer: well I’m sure we agree but I don’t describe this is business as usual. Secondary sanctions are a serious matter…

[At 23:15] What we are understand is that we are now with India and with China going into a new stage of economic warfare. And when we’re in that stage, we don’t signal our punches. We don’t signal our movements. Nobody tells Reuters or Bloomberg or the shipping agencies which monitor the movement of tankers what’s going to happen next. That’s the first point.

The second point is that from an Indian point of view and I’m speaking from an effort I’ve made to contact my Indian sources and listen to their guarded assessment of what’s about to happen.The issue is not going to be compliance with with Trump. Absolutely not. Without necessarily having Prime Minister Modi insulting Trump.

The issue is whether the Indian side and the Russian side can resolve the most serious payment problems that they have encountered which from the Indian side is a failure on the Russian side. Principally central bank governor Nabillina, the central bank of Russia. is extremely sluggish in implementing the bilateral payment schemes between oil priced in an American currency, oil sold for rupees or dollars or rubles and achieve an effective exchange transaction exchange. This first problem and the Indian side sees it as a Russian problem to solve.

And in these new warfare conditions, I’m willing to bet you the Russians will solve it because Governor Nabiolina is an opponent of the current war and cannot continue to block effective Russian waging of resistance the economic war. So I expect the Indian/Russian payment inter payment problem to be solved.

The second problem is the price the price and therefore the discount on the shipment of crude oil in defiance of the American warfare. When you have a warfare like this, going back to Napoleonic times, when you have an attempt to impose a a cordon sanitaire trade block uh between England and its allies in Europe, when you attempt to break the blockade, uh there’s obviously a a discount against the market price where there’s no warfare condition. It’s normal.

Second, the question of where the discount is paid, how it’s how in particular the UAE, Dubai, Abu Dhabi mediators or middlemen or intermediary systems for managing this discount and affecting the trade will work. Now the Americans understand this very well and they’re escalating. You can read the wire services against the UAE banking system to try to stop Russian Indian intermediation through Dubai.

They’re, the Americans are attempting to crush UAE facilitation as they successfully crushed the Cyprus one some years back. So first there has to be a solution to the rupee-rouble-dollar problem. The Russians have to stop requiring the denomination of oil transactions in in US dollars and find the way. I believe they will find the way.

Second, the intermediation that principally goes on through the UAE has to be facilitated and also has to resist US war. And there’s a third dimension that’s direct warfare against Russian tankers. We’ve already seen and I believe we said it on your last program Dimitri that the US and the British are attacking Russian tankers in the Mediterranean or wherever the opportunity arises to plant mines and attack tankers with drones. Now that’s direct warfare. You can call it terrorism. I call it warfare.

And um uh one of the things that would no doubt appeal to a man of violent tastes like President Trump would be the concept of sabotage of Russian tankers on their way to India outside Indian ports in the Indian Ocean. So we have three problems to solve.

Russia and India have to solve the sabotage problem. They have to solve the payment problem. They have to solve the intermediation problem. In this sort of warfare, the longstanding traditional strategic relationship between India and Russia will manage to solve the problems that some foot dragging on the Russian side and some misunderstanding on the Indian side and some problematics in the UAE. They’re always problematics in the UAE uh are slowing us up now.

I am surprised to see that Russia is still pricing oil in dollars. That raises the possibility that Russia, despite the sanctions, is able to buy hedges. And the only way to do that affordably and in depth is in dollar markets.

A second important discussion takes place starting at 32:55, where Helmer explains why India believes it won its recent dustup with Pakistan and why conventional wisdom otherwise is wrong. Helmer contends that the idea that Pakistan’s Chinese weapons proved to be superior is false, and that Pakistan’s Field Marshall, Asim Munir, who is the real leader of Pakistan, recently had lunch with Trump. Per Helmer:

Pakistan is pitching to the United States to be the new, let’s call it, Ukraine battlefield, the platform for the new and continuing US war against Iran. Iran. Okay. So what Munir has proposed is increased cooperation on arms supply and financial services and Trump himself has announced that he has struck a deal with the Pakistan government, that’s really the military leadership, that’s really Field Marshall Munir to provide all uh Pakistan oil concessions to US companies.

There’s more to his argument but that’s a core element.

Helmer is confident that Trump secondary sanctions will fail. And even though that seems likely, one wonders at what collective cost.
____

¹ From India’s Ministry of External Affairs:

India has been targeted by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict. In fact, India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict.
The United States at that time actively encouraged such imports by India for strengthening global energy markets stability.
2. India’s imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation. However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion.
3. The European Union in 2024 had a bilateral trade of Euro 67.5 billion in goods with Russia. In addition, it had trade in services estimated at Euro 17.2 billion in 2023. This is significantly more than India’s total trade with Russia that vear or subsequently. European imports of LNG in 2024, in fact, reached a record 16.5mn tonnes, surpassing the last record of 15.21mn tonnes in 2022.
4. Europe-Russia trade includes not just energy, but also fertilizers, mining products, chemicals, iron and steel and machinery and transport equipment.
5. Where the United States is concerned, it continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilizers as well as chemicals.
6. In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.