US Treasury Chief: ‘Ultimately, We’ll Reunite’ – As Tariffs Hit Indian Exports
NEW DELHI/WASHINGTON – As tariff tensions between India and the United States escalated on Wednesday, Washington imposed an additional 25% levy on Indian imports, citing New Delhi’s continued purchase of Russian crude oil and defence equipment. The move raises the total tariff burden on Indian goods entering the US to a staggering 50%, one of the highest levels among America’s trading partners.
Despite the economic strain, US Treasury Secretary Scott Bessent struck a conciliatory tone in an interview with Fox Business, expressing confidence in the resilience of India–US ties.
“India is the world’s largest democracy, the US is the world’s largest economy. At the end of the day, we will come together,” Bessent said.
Trade Talks Lag Behind Expectations
While reiterating the strategic importance of bilateral ties, Bessent acknowledged that progress on a trade deal has been slower than expected.
“We still don’t have a deal. I thought we would have one by May or June. India’s approach has been performative, and while they began negotiating soon after Liberation Day, they’ve kept us tapped along,” he said, also criticising India’s continued import of discounted Russian oil.
He added that while US President Donald Trump and Prime Minister Narendra Modi maintain a strong relationship at the top level, “this is a complicated relationship, and it’s not just about Russian oil.”
India Responds: ‘No Cause for Panic’
In response to the US action, Indian government sources cited by PTI said that communication channels remain open, and that efforts are ongoing to resolve the dispute diplomatically.
“The impact is unlikely to be as severe as feared, given the diversified nature of Indian exports,” officials said, adding that this is likely a temporary phase in a long-term partnership.
India was the largest exporter to the US in 2024, with shipments valued at USD 87.3 billion.
Tariffs Impacting Key Sectors
While certain critical sectors such as pharmaceuticals, semiconductors, and smartphones have been exempted from the new duties, industries like textiles, seafood, jewelry, steel, and automobiles are already feeling the pinch.
Exporters have reported cancelled US orders and diverted contracts to regional competitors like Bangladesh and Vietnam, prompting calls for immediate government intervention.
“We want to ensure that even if business stops, we are able to keep workers on the payroll,” said Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), while urging the government to offer liquidity support to exporters.
Modi Vows Self-Reliance Amid Global Pressures
During his Independence Day address, Prime Minister Narendra Modi reaffirmed his commitment to Atmanirbharta (self-reliance) and announced plans to reduce the tax burden on citizens. He also pledged to protect national interests in global trade matters.
India has defended its Russian oil purchases, arguing that Western suppliers diverted shipments to Europe after the Ukraine invasion, leaving India to explore alternatives. The Ministry of External Affairs pointed out that Washington initially encouraged such imports to stabilise global energy markets.
In 2024, Russia supplied nearly 36% of India’s crude, helping India save billions in foreign exchange and maintain stable fuel prices.
Washington Takes a Harder Line
Despite India’s rationale, the Trump administration has pressed ahead with steep tariffs. Trade advisor Peter Navarro went further, accusing India of “profiteering” from discounted Russian oil and “cozying up to Xi Jinping.” He also controversially claimed India had failed to acknowledge its role in what he termed “the bloodshed.”
Wendy Cutler, Vice President of the Asia Society Policy Institute and a former US trade official, noted that India has gone from being “a promising candidate for an early trade deal to a nation facing among the highest tariffs.”
“These actions have eroded trust between the two countries, and repairing that trust could take years,” she warned.
Global Tariff Spree Expands
India is not alone. Since Trump’s return to office in January, his administration has imposed high tariffs on allies and competitors alike—including the EU, Brazil, Indonesia, and others—as part of a broader push against what Washington calls unfair trade practices.
In Brazil’s case, tariffs jumped to 50% this month following Washington’s concerns over alleged democratic backsliding in the country.
