Daybreak - Biden said 'please' till 2024. Trump's saying 'penalty' in 2025

Episode Date: August 7, 2025

Just a year ago, U.S. officials publicly encouraged India to buy discounted Russian oil to help stabilise global markets during the Ukraine war. But fast forward to 2025, and the U.S, under President Trump, has slapped India with the highest tariffs in the world: 50% on its exports. Trump has accused India of funding Putin’s war machine.So what changed?In this episode, we break down how India went from energy partner to trade target for doing exactly what the U.S. once asked. We also look at the double standards: America’s own imports from Russia and its backing of Israel in Gaza.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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With that, back to your episode. You heard the news. The United States is slapping India with the highest tariffs in the world. 50% for buying oil from Russia. So we settled on 25%, but I think I'm going to raise that very substantially over the next 24 hours because they're buying Russian oil, they're fueling the war machine.

And if they're going to do that, then I'm not going to be happy. Trump went on to accuse India of funding Putin's war machine and even profiting by selling Russian oil in the open market. And he is calling this a national security threat. But here is what Trump and nobody from his administration is talking about. Just a year ago, before he came into his second term, the U.S. was encouraging India to buy. Russian oil, publicly.

In the early months of the Ukraine war, the Biden administration needed global oil prices to stay low. Sanctions on Russia were shaking the energy markets, so Washington looked at India. Why? Because Indian refineries were willing to buy the discounted Russian oil that Europe was refusing to touch, and that helped keep global supplies flowing and oil prices in check. U.S. officials actually openly admitted this, and Bob McNally, a former White House energy advisor in an interview with CNBC, said in 2024, and I'm quoting, we begged India to take Russian oil.

Eric Garcetti, who was the U.S. ambassador to India, even said that the purchases were by design and not a violation of sanctions. Now, fast forward to August 2025, and that same trade is now being used as grounds for economic punishment. So is this about ending a war or is it about using war as leverage? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahil Filippos and I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 8th of August. Let's rewind to 20. When Russia invaded Ukraine, most Western countries began cutting off Russian oil.

Prices went up, but India did not stop buying. In fact, it ramped up purchases like never before. Why? Discounts. Russian crude oil was cheaper, way cheaper. And that mattered for a country like India, which is the third largest oil importer of the world. We buy more than 80% of our oil from overseas. And Russia saw a perfect bio.

India was not a part of the G7 price cap coalition, and that meant that Indian refiners could legally buy Russian oil without worrying about sanctions as long as they avoided Western ships or insurance. And that is exactly what India did. By mid-2023, Russia became India's top oil supplier, accounting for 35 to 40 percent of Indian oil imports. Now, two major players drove this, Reliance Industries and Nayara Energy. Between them, they handled over half of India's Russian oil imports.

Now, here is where things get interesting. This trade did not happen in the shadows. The US knew about it, and more than that, they approved of it. So back in 2024, here is what Ambassador Eric Gorsetti said. Actually, they bought Russian oil because we wanted somebody to buy Russian oil at a price cap. That was not a violation or anything. It was actually the design of the policy because as a commodity, we didn't want oil prices going up. And they fulfilled that.

You see, the alternative to this meant pulling Russian oil completely off the market. And as you can imagine, it would have sent global prices skyrocketing. And remember, the global economy was still recovering from COVID-19 back then. So, the US did not just tolerate India's oil purchases from Russia, they saw it as necessary. Eric Van Nostrad, who is the US Treasury official, explained this in 2024 at a Delhi event. He said that the price cap policy was about limiting Kremlin revenue and not about removing Russian oil from the market. They wanted Putin to keep selling, but at a discount.

And this helped everyone. Russia kept the oil flowing, India got it cheap, and the West kept inflation in check. It was a win-win-win. And even the legal argument was actually on India's side. According to Anna Morris, who is another U.S. Treasury official, once Russian crude is refined into products like diesel or gasoline, it has no longer considered Russian oil. That meant Indian exports to Europe, even if refined from Russian crude, were not violating. sanctions. So India was following the rules. Until suddenly, it wasn't. For more on this,

stay tuned. Now enter Donald Trump. In July 2025, as we all know, he imposed 25% tariffs on Indian imports. And then in August, just a few days ago, he doubled down raising it to 50% after signing an executive order which was titled Addressing Threats to the US by the Russian Federation. His justification was that he said India was buying massive amounts of Russian oil and then selling refined products in the open market for big profits. In his words, they don't care about how many people in Ukraine are being killed by the Russian war machine. And now, India faces the highest tariffs in the world tied only with Brazil.

And it is interesting to note that China, which buys even more Russian oil, was not targeted by Donald Trump. This is happening despite the sure scale of U.S. India trade. Last year alone, India and U.S. exchanged nearly $130 billion worth of goods and services. India's top exports to the U.S. include pharmaceuticals, auto parts, electrical equipment, and gemstones. And these are vital to the American supply chains and jobs. And here is the uncomfortable irony.

While Trump is penalizing India for trading with Russia, the U.S. itself continues to import Russian goods and services worth around $3.5 billion a year, including critical materials like uranium. And while Trump frames Indian oil trade as enabling the Ukraine war, the U.S. has been actively supplying arms and political cover to Israel in its ongoing military operations in Gaza. All of this is obviously not going down. well with New Delhi. The Indian Ministry of External Affairs called the move by Donald Trump, unfair, unjustified and unreasonable. The ministry went on to add that India's imports are based on market factors and done with the overall objective of ensuring the energy security of

nearly one and a half billion Indians. And that therefore, it is extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest. And it stressed that India will take all actions necessary to protect its national interests. Now, some analysts believe that it is more about leverage, this whole game. India and the US were in the middle of tense trade negotiations, and according to Reuters, those talks collapsed due to political misjudgment, mis-signals and bitterness.

And there is a pattern here. Trump has long complained about India's trade practices. He called out India's 70% tariff on U.S. passenger vehicles and tariffs on electronics, rice and steel. And in April, he introduced 26% reciprocal tariffs, though they were briefly paused. But now, with the 2025 U.S. election cycle heating up, Trump is using tariffs as a tool, not just for economics, but for foreign policy pressure. India's oil trade with Russia has become the latest battleground. So, where does this leave us?

A year ago, India was the US energy stabilizer, and today it is being punished for the same behavior that it was being praised for. The rules haven't changed, the players haven't changed, only the politics has. And now, yes, these tariffs have brought in serious cash for the US government, over $150 billion this year alone, but at what? cost. Businesses in the US are already hurting. They are saying that they cannot afford these rising import prices anymore and it is showing. Everything from clothing to appliances is getting more expensive. In fact, I spoke about how the fashion industry in the US is getting impacted from Trump's tariffs

in last Friday's episode of daybreak. And now, when you look at the American economy, yes, it is still growing, but barely. Hiring has slowly. Hiring has slowly. down in July and inflation is creeping back into the picture. So, who is paying the price here? Is it India or is it the American consumer? Or is it both? Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extra. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snitah Sharma and edited by Rajiv Sien.