President Trump’s new tariff regime is shaking up trade flows with India, and refined products are right in the middle of the uncertainty. On April 2, 2025, Executive Order 14257 (EO 14257) established a national emergency to address persistent U.S. trade deficits by imposing reciprocal tariffs on imports from various countries. Included in EO 14257 was a 26% levy on imports from India. Then, on August 6th, in response to India’s importation of Russian Federation oil, the administration imposed an additional 25% reciprocal tariff on all Indian-origin goods. This second tariff will become effective August 27, 2025, raising the total tariff rate on imports from India to 51%.
The intent is clear: Washington wants to discourage India from processing Russian oil and reselling the refined products into global markets. What’s not clear is whether petroleum products shipped to the U.S. will get caught in the net. The White House hasn’t published a full product list pertaining to the August 6th EO, and Annex II of EO 14257 appears to carve out “energy and energy products” from the second phase of duties. That exemption, if applied to refined fuels, would limit Indian barrels to the August 6th tariff of 25%.
Why does this matter? India has become a meaningful player in U.S. supply. In the first four months of 2025, the U.S. imported about 72,000 barrels per day (bpd) of gasoline and blendstocks from India – about 11% of total gasoline and blendstock imports. Canada and the Netherlands supplied more, but India’s flows are significant, particularly into the East Coast and California. Both markets have stringent fuel specs, and Indian refiners have invested in technology that can meet those standards.
Figure 1. Gasoline Flow Routes
So, what happens if a 51% tariff applies? At an imported product value of $2.00 per gallon, another dollar per gallon in duties is enough to shut India out of the U.S. trade lane. Importers would scramble to cover these shortfalls with imports from Europe, the Middle East, and Asia – refiners capable of making clean-burning formulations but not subject to additional tariffs. That reshuffling won’t be free. Stillwater estimates new trade patterns could add 5-25 cents per gallon (cpg) in supply chain costs including suppliers’ cost to change their product slates or customer mix, which would trickle down to wholesale and eventually retail prices.
If petroleum is shielded under Annex II of Executive Order 14257, the picture changes. A 25% tariff is still painful, but not terminal. Importers could justify paying a premium on some Indian barrels if alternatives are tight. The devil will be in the Harmonized Tariff Schedule code details, and classification disputes could keep Customs busy in the weeks ahead. Importers would be wise to lock down tariff treatment with U.S. Customs and Border Patrol before cargoes hit U.S. shores.
For India, the issue is bigger than fuels. The tariffs come at a time when the U.S. trade deficit with New Delhi has already widened to an eight-month high. Indian officials are signaling initiation of a challenge before the World Trade Organization. Meanwhile, refiners and traders on both sides of the Pacific are holding their breath. With the second tariff set to kick in August 27th, the only certainty is more uncertainty – and that’s something markets hate.
Fact Box: U.S. Tariffs on Indian Petroleum Products
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