LPG from Russia US with love

India's purchase of LPG from the US has an impact on rebalancing trade between the two countries and on ongoing tariff negotiations. Although the deal is not part of trade talks, it does facilitate their resolution. India and the US are trying to hammer out a deal that addresses Washington's concerns over tariffs and dependence on Russian energy exports. The Trump regime has slapped 25% reciprocal tariffs and an additional 25% penal duty over Russian crude oil imports. Energy imports from the US, of which LPG purchase represents a small but significant beginning, address both the US concerns and should help with tariff revocation. Indian exports to its largest trading partner could recover from the tariff hit they had taken earlier in the year as trade negotiations stalled over granting the US greater market access in agricultural products.

Energy, along with arms, is a low-hanging fruit for an India-US trade reset. Dependence on Russian energy was brought on by Western sanctions following the outbreak of war in Ukraine. The global oil market would have been upended had India not stepped up imports of Ural crude replacing traditional suppliers in the Persian Gulf. The only way the US can alter the situation is by offering its own energy exports to India as support. Washington does not have enough influence over oil-producing nations to get them to keep prices stable and force India off Russian crude at the same time. In the event, the LPG export order represents a US acceptance of economic reality and India's determination to pursue an independent energy security policy.

Food and energy security are among India's major concerns, and it is bound to oppose pressure from any quarter that might make either item more expensive for Indian consumers. Food prices are a more sensitive area and Indian negotiators will find it easier to make concessions over energy imports. The US side will likewise be able to achieve its intended outcome without having to push deeper into no-go areas in farm trade.