On July 30, U.S. President Donald Trump announced a baseline tariff of 25 percent on Indian exports, along with “a penalty” for buying oil and military equipment from Russia. On Aug. 6, he signed an executive order (EO) placing “an additional ad valorem rate of duty of 25 percent” on India. It made clear that any retaliation against this order “may” lead to a modification of the order and would go into effect in 21 days. Furthermore, it said that if Russia or any foreign country impacted by the order were to “align sufficiently” with the United States on matters related to national security, foreign policy, and the economy, then the tariff rate could change again.

Essentially, if India continues to purchase Russian oil, the tariff stays and may be increased. If it starts to diversify away from buying Russian oil, then it could be reduced or removed. The EO has moved the goalpost beyond trade negotiations. Even if the first tranche of a trade agreement were to be reached, which is looking unlikely, India will still have to deal with the issue of its Russian oil purchases. White House trade advisor Peter Navarro has argued that “India’s oil lobby is funding Putin’s war machine.” Yet an attempt to force India to diversify away from Russia—effectively dictating its foreign policy—is a nonstarter. In fact, it only makes it more difficult to do what Indian firms may have already wanted to do, which is find alternative vendors in the global oil market.

On July 30, U.S. President Donald Trump announced a baseline tariff of 25 percent on Indian exports, along with “a penalty” for buying oil and military equipment from Russia. On Aug. 6, he signed an executive order (EO) placing “an additional ad valorem rate of duty of 25 percent” on India. It made clear that any retaliation against this order “may” lead to a modification of the order and would go into effect in 21 days. Furthermore, it said that if Russia or any foreign country impacted by the order were to “align sufficiently” with the United States on matters related to national security, foreign policy, and the economy, then the tariff rate could change again.

Essentially, if India continues to purchase Russian oil, the tariff stays and may be increased. If it starts to diversify away from buying Russian oil, then it could be reduced or removed. The EO has moved the goalpost beyond trade negotiations. Even if the........

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