China Defies Sanctions With Russian LNG Imports; U.S. Tariffs Target India

China has emerged as a consistent buyer of liquefied natural gas (LNG) from Russia’s sanctioned Arctic LNG 2 project, signaling a significant shift in global energy flows. The project, located on Russia’s Gydan Peninsula, had been effectively frozen for over a year due to sanctions imposed by the United States, the European Union, and the United Kingdom. These sanctions targeted both the project and the vessels servicing it, deterring most potential buyers. However, in late August 2025, the first cargo from Arctic LNG 2 was received at China’s Beihai LNG terminal, followed by two more shipments within weeks. The most recent delivery involved the Zarya tanker, which unloaded over 160,000 cubic meters of LNG. Two additional tankers are currently en route to Beihai, suggesting that China has become a regular importer of Russian LNG despite the risk of secondary sanctions.

The United States has responded by intensifying pressure on India to reduce its energy ties with Russia. U.S. Commerce Secretary Howrad Luttnick emphasized a finalized trade deal with India would only take place after New Delhi halts its purchases of Russian oil and opens its markets further. Lutnick expressed India had not been a major buyer of Russian oil before the Ukraine war but has since become one of Moscow’s largest customers, accounting for nearly 40 percent of India’s crude imports. India has also increased exports of refined fuels to Europe since 2023, effectively re-routing Russian oil into Western markets. In August 2025, Washington imposed a 25 percent penal tariff on most Indian imports, in addition to an earlier 25 percent tariff, citing India’s continued reliance on Russian crude. Trump’s nominee for ambassador to India, Sergio Gor, reiterated that India must stop buying Russian oil, while also expressing optimism that trade disputes could be resolved in the near future.

China has simultaneously reinforced its dominance in the rare earths sector, tightening state control over mining, refining, and exports. In August 2025, Beijing’s Ministry of Industry and Information Technology introduced interim measures requiring companies to operate within government-set quotas and obtain approval for trade. China already accounts for nearly half of global rare earth reserves, over 60 percent of global production, and approximately 92 percent of refining capacity. It also supplies about 30 percent of global demand through exports. In April 2025, Beijing imposed export restrictions on seven rare earth elements critical for clean energy technologies and defense applications, including those used in neodymium-iron-boron magnets. The United States and India remain heavily dependent on Chinese supply, with India sourcing more than 75 percent of its rare earth imports from China since 2021. China has also invested approximately $14 billion annually in mineral exploration since 2022, marking the highest three-year stretch of investment in a decade.

The United States has sought to counterbalance these developments by urging the European Union to impose tariffs of up to 100 percent on imports from China and India, citing their purchases of Russian oil. President Donald Trump reportedly made this proposal during a meeting in Washington with top U.S. and EU officials. While the White House and European Commission have not confirmed the discussions, reports indicate that Europe is unlikely to comply, preferring to focus on its forthcoming 19th sanctions package targeting Russia and sanctions evasion through third countries. India has already criticized Washington’s existing 50 percent tariff regime, while European officials remain wary of damaging relations with both India and China. Trump has publicly stated that he expects his upcoming talks with Indian Prime Minister Narendra Modi to result in a successful conclusion for both countries.

Meanwhile, the United States is expanding its own energy footprint in Europe. On September 11, 2025, U.S. Interior Secretary Doug Burgum visited Greece, highlighting the country’s role as a hub for American LNG exports to Europe. Burgum emphasized that Greece’s bidirectional pipeline network, which extends as far as Ukraine, could enhance European energy security by reducing reliance on Russian supplies. More than half of the EU’s LNG imports already come from the United States, and volumes are set to rise further under a trade deal reached earlier in 2025. Burgum’s visit coincided with Chevron’s announcement of a joint bid with Helleniq Energy to explore offshore gas reserves near Crete and western Greece, a move that has drawn objections from Libya, claiming it infiltrates maritime areas where it claims jurisdiction.

India has also adjusted its financial strategy in response to U.S. tariffs and global uncertainty. According to U.S. Treasury Department data, India reduced its holdings of U.S. Treasury securities from a peak of $247.2 billion in September 2024 to $227 billion by June 2025. This shift reflects a more cautious approach by the Reserve Bank of India in managing foreign exchange reserves, which stood at $690 billion in August 2025. Analysts suggest that India is likely to continue reducing exposure to U.S. debt while bringing more of its gold reserves back to India from abroad.

The developments highlight a deepening realignment in global energy and trade systems, with China, India, and Russia consolidating their positions in ways that challenge U.S. and European leverage. China’s decision to import LNG from Russia’s Arctic LNG 2 project despite sanctions demonstrates both its willingness to defy Western pressure and its capacity to absorb the risks of secondary sanctions. This move not only provides Russia with a critical outlet for its energy exports but also signals to other states that U.S.led sanctions regimes can be circumvented if major economies are willing to cooperate. The fact that multiple shipments have already been received, with more en route, suggests that this is not a one-off transaction but the beginning of a sustained trade pattern.

India’s balancing act between its energy security needs and U.S. trade pressure underscores the complexity of international trade . By sourcing nearly 40 percent of its crude from Russia, India has secured discounted energy supplies that support its economic growth. At the same time, its re-export of refined fuels to Europe highlights the insecurity of sanctions enforcement, as Russian oil continues to reach Western markets indirectly. Washington’s imposition of punitive tariffs on Indian imports reflects frustration with this dynamic, but the U.S. risks alienating a key strategic partner in Asia if it pushes too hard. The fact that Trump administration officials continue to express optimism about resolving trade disputes suggests that Washington recognizes the limits of coercion in this case.

China’s dominance in rare earths represents a structural vulnerability for the United States, India, and other advanced economies. By controlling nearly every stage of the supply chain, from mining to refining, Beijing wields significant leverage over industries critical to both clean energy and defense. The April 2025 export restrictions demonstrated China’s willingness to weaponize this dominance in response to trade tensions. For India, which sources more than three-quarters of its rare earth imports from China, this dependency poses a strategic risk that could undermine its ambitions in advanced manufacturing and defense technology. For the United States, the reliance on Chinese supply chains undermines efforts to decouple from Beijing in critical sectors.

The U.S. push for Europe to impose 100 percent tariffs on China and India illustrates Washington’s attempt to build a united front against sanctions circumvention. However, Europe’s reluctance to comply reflects its own strategic calculations. The EU is wary of escalating trade conflicts with two of its largest trading partners, particularly at a time when it is already grappling with the economic fallout of the Ukraine war. Instead, the EU appears to prefer targeted measures against sanctions evasion rather than sweeping tariffs. This divergence highlights the difficulty of maintaining transatlantic unity on economic coercion, especially when European industries are directly exposed to the consequences.

The U.S. expansion of LNG exports to Europe through Greece represents a counter-strategy to reduce Russian influence over European energy supplies. By positioning Greece as a hub, Washington is not only securing markets for its own energy producers but also embedding itself more deeply in Europe’s energy security architecture. The Chevron-Helleniq Energy exploration project further underscores the U.S. commitment to expanding its role in the Mediterranean energy landscape, though Libya’s objections highlight the potential for new maritime disputes.

India’s reduction of U.S. Treasury holdings signals a broader trend of diversification away from dollar-denominated assets. This move reflects both a desire to hedge against U.S. financial leverage and a recognition of the risks posed by Washington’s increasing use of economic coercion. By repatriating gold reserves and reducing exposure to U.S. debt, India is positioning itself to withstand potential financial shocks and sanctions pressure. This trend, if sustained, could contribute to the gradual erosion of the dollar’s dominance in global finance.

Taken together, these developments illustrate a multipolar shift in the global economic order. China and India are asserting greater autonomy in their energy and financial policies, while Russia is finding new lifelines for its sanctioned exports. The United States is responding with tariffs, sanctions, and energy diplomacy, but its ability to enforce compliance is constrained by the divergent interests of its allies and partners. The result is a fragmented landscape in which sanctions are increasingly contested, energy flows are being rerouted, and financial strategies are being recalibrated to reduce exposure to U.S. leverage.

- China

- India

- Russia

- United States

- European Union

- Greece

- Libya