Why is the US sparing China, but not India, for importing Russian oil? | Business and Economy News

United States President Donald Trump has threatened to slap new sanctions on Russia and secondary sanctions on countries that buy Moscow’s crude in efforts to end the Russia-Ukraine war.

While Trump imposed an additional 25 percent tariff earlier this month – to a total of 50 percent – on India’s goods, citing its continued imports of Russian oil, he has not instigated similar punitive actions against China, the largest buyer of Russian energy.

So, why has the Trump administration mounted pressure on India to stop purchasing Russian oil while taking little action against China?

Who is buying Russia oil, and how does Trump want to prevent that?

As the largest purchaser of Russian oil, China imported a record 109 million tonnes of this product last year, representing nearly 20 percent of its total energy imports, Chinese customs data showed.

India, by contrast, imported 88 million tonnes of Russian oil in 2024.

As such, China has arguably been Russia’s key economic lifeline, leading to accusations that Beijing is indirectly helping Moscow in its war on Ukraine, now in its fourth year.

It is understood that lawmakers from both main US political parties are pushing for a bill – the Sanctioning Russia Act of 2025 – that would target any country that buys Russian oil and natural gas.

The bill would give Trump the authority to impose 500 percent tariffs against nations that are perceived to be helping Russia. US senators are reportedly waiting on Trump’s OK to move the bill forward.

What reasons has Trump cited for not imposing new tariffs on China?

Asked by Fox News on August 15 if he was considering secondary sanctions on Beijing after he and Russian President Vladimir Putin failed to agree on a Russia-Ukraine ceasefire in Alaska last week, Trump said, “Well, because of what happened today, I think I don’t have to think about that.”

“Now, I may have to think about it in two weeks or three weeks or something, but we don’t have to think about that right now,” he said.

Observers suspect Trump is buying time to allow negotiations on a broad trade deal that would include rare earth minerals.

Rare earths are a group of 17 elements essential to numerous manufacturing industries, from auto parts to clean energy and military technology. China has long dominated the mining and processing of rare earth minerals.

Because numerous US industries are heavily reliant on Chinese minerals, they remain a central issue in ongoing trade talks.

Trump has other reasons for giving China an easier ride than India. In particular, he’s keen to avoid a tariff spike just as US retailers stock up on inventories of Chinese goods ahead of December’s Christmas holiday season.

For his part, Trump has taken steps to reduce trade flashpoints in recent weeks. Earlier this month, the US eased some of its export restrictions on advanced semiconductors – a key demand from China.

On August 11, Trump permitted US company Nvidia to sell advanced chips to China – even if the tech giant would have to pay 15 percent of its China sales to the federal government. Trump had previously barred the deal.

Speaking to CNBC news on Tuesday, US Treasury Secretary Scott Bessent defended Washington’s decision not to impose secondary sanctions against China saying, Beijing purchased 13 percent of Russian oil before the Ukraine war, which has now increased to 16 percent. “So China has a diversified input of their oil,” he said.

He added that China had not engaged in the kind of “arbitrage” done by India.

But Bessent accused India of “profiteering”. He pointed out that before the Ukraine war, India’s import of Russian oil was less than 1 percent. But “now, I believe, it’s up to 42 percent,” he said. “This is what I would call the Indian arbitrage – buying cheap Russian oil, reselling it as product,” he told CNBC.

“They’ve made $16bn in excess profits – some of the richest families in India.”

On Monday, White House trade adviser Peter Navarro became the second senior Trump administration official to accuse India of financing Russia’s war in Ukraine. Earlier this month, Stephen Miller, deputy chief of staff at the White House, said that New Delhi’s purchase of Russia crude was “not acceptable”.

What have other officials said?

On August 12, US Vice President JD Vance declined to say whether Trump would move against Beijing as he did with New Delhi the previous week, when Washington announced an extra 25 percent tariff on India’s imports over its continued purchase of Russian oil.

“The president said he’s thinking about it, but he hasn’t made any firm decisions … the China issue’s a little bit more complicated because our relationship with China, it just, it affects a lot of other things that have nothing to do with the Russian situation,” Vance said.

Earlier this week, US Secretary of State Marco Rubio warned that energy prices could rise if the US imposes secondary sanctions on China for refining Russian oil.

In an interview with Fox News on Monday, Rubio said, “If you put secondary sanctions on a country – let’s say you were to go after the oil sales of Russian oil to China. Well, China just refines that oil. That oil is then sold into the global marketplace, and anyone who’s buying that oil would be paying more for it.”

Meanwhile, Beijing’s embassy in Washington said China’s trade with Russia falls within the scope of international law.

“The international community, including China, has conducted normal cooperation with Russia within the framework of international law,” said Liu Pengyu, the embassy’s spokesman, on July 6.

How would heightened tariffs impact the US and Chinese economies?

A ceasefire deal in Ukraine, with the resulting reduction of sanctions on Russia, would bring greater stability to the international system and a boon for China’s economy, not least after the last subdued economic data in July.

Last month, China’s economy slowed as factory activity, investment and retail sales fell from June, suggesting that spillovers from Trump’s tariffs are casting a pall over the world’s number-two economy.

Elsewhere, China’s youth unemployment rate rose to its highest level in 11 months in July, as the urban jobless rate for the 16-24 age group, excluding students, rose to 17.8 percent – up from 14.5 percent in June.

Alicia Garcia Herrero, chief Asia Pacific economist at Natixis in Hong Kong, told Al Jazeera that “Cracks are starting to show [in the Chinese economy] and the overall picture is not great.”

Still, she said that “Chinese banks and firms have been preparing for the possibility of secondary sanctions for a long time already. They already started worrying about this under the [Joe] Biden administration.”

In recent years, Beijing has stepped up its efforts to diversify trade routes and build greater numbers of strategic products at home, making China’s economy “harder to strangle through elevated or secondary sanctions”, said Garcia Herrero.

“Clearly,” she said, “given the high level of goods imports from China to the US, higher tariffs would also raise inflation for American consumers.”

Last year, the US trade deficit with China was $295.4bn, marking a 5.8 percent rise from 2023.

What is the current state of US-China trade?

On August 12, the US and China extended a pre-existing tariff pause – and avoided an all-out trade war – for 90 days. With the extension, the imposition of higher US tariffs on China was suspended until November 10, with all other elements of the truce remaining in place.

The two sides agreed to their first tariff pause on May 11.

In April, China was slapped with a tariff of 145 percent while Beijing slapped a reciprocal tariff of 125 percent on the US – rates that amounted to a virtual trade embargo between the countries.

High tariffs prompted the US trade deficit with China to fall to its narrowest level since 2004 in June, according to US Census Bureau data. The US trade gap with China fell by $22.2bn from March to August. That amounts to a 70 percent drop from one year earlier.

But the tariff truce agreed to in May in Geneva, Switzerland, lowered the temperature by temporarily slashing US tariffs on Chinese imports to 30 percent, while Chinese levies on US exports fell to 10 percent. Beijing also agreed to resume some rare earth exports.

“I think there will be a [trade] deal of some sort soon,” Garcia Herrero said. “Nothing dramatic, as the levels of trust on both sides are low. But the US and China both need some positive news, or they face hitting economic walls.”