India-US tariff dispute: The escalating trade tensions between India and the US entered a new chapter this week when President Donald Trump’s administration imposed an additional 25% tariff on Indian goods linked to New Delhi’s continued purchases of Russian crude oil. The move doubles the duty on Indian imports to 50%, raising concerns about the future of bilateral trade ties.
Despite the tensions, US Treasury Secretary Scott Bessant signalled cautious optimism. In an interview with Fox Business on Wednesday, Bessant described the India-US relationship as “very complex” but expressed hope that “ultimately, we will come together.”
A complicated trade relationship
Bessant emphasised that while both Prime Minister Narendra Modi and President Trump share a cordial personal relationship, the trade equation remains tense.
“It’s a very complex relationship. There is a very good rapport at this level between President Trump or Prime Minister Modi. And it’s not just on the issue of Russian oil,” Besant remarked.
They acknowledged India’s position as the world’s largest democracy and the US as the world’s largest economy and stressed that cooperation is important.
Tariff war and stalled negotiations
The US decision comes after months of negotiations. According to Besant, India began discussing tariffs immediately after April 2, 2025 – what Trump called “liberation day” – when widespread tariffs were announced globally.
“I thought India could be one of the early deals. And they included us in the negotiations as well. And then there is also the aspect of buying Russian crude oil, which they are profiting from. So there are many levels of negotiations,” he explained.
Besant admitted that he initially thought a trade deal with India could be finalised by May or June, but the talks did not yield any results.
India’s firm stand
Prime Minister Narendra Modi reiterated in a speech earlier this week that his government would not compromise on the interests of farmers, livestock farmers and small industries.
“Pressure may mount on us, but we will bear it,” Modi asserted, indicating New Delhi’s reluctance to succumb to external economic pressures.
US gains from deficit
Talking about the trade imbalance, Besant stressed that the US remains a deficit country in its relations with India.
“When there is a rift in trade relations, the deficit country gains. The surplus country should be worried. Indians are selling us goods, their tariffs are very high, and we have a huge deficit with them,” he said.
Rupee vs Dollar Debate
On concerns about India’s growing push for rupee-based trade within the BRICS nations, Bessant dismissed it.
“I worry about many things. Rupee becoming a reserve currency is not one of them. I think the rupee is at its lowest level ever against the US dollar,” he said.
Global context and Europe’s role
Bessant also emphasised the importance of Europe’s role in the broader geopolitical framework.
“Our European allies have to step up. I don’t think they will threaten to put tariffs on Indians. In fact, they are the ones who buy refined products made from Russian oil,” he said.
Trump has justified his tariff strategy as part of his broader goal of ending the Ukraine war, claiming that the conflict “would never have started” under his leadership.
Looking ahead
With tariffs now at 50%, the coming weeks could test the strength of India-US trade ties. Trump’s decision to double tariffs on Indian goods on August 7 prompted 21 days of negotiations, but no agreement has yet been reached.
Despite the heightened tensions, Secretary of State Besant’s comments indicate that the two countries may eventually find common ground. He said, “I think eventually we will come together,” and kept the door open for reconciliation.