Amid escalating trade tensions between the United States and India, a senior Trump administration official has expressed optimism about the two countries' ability to resolve their differences. Despite recent tariff hikes and disagreements over India's relationship with Russia, Treasury Secretary Scott Bessent stated, "Two great countries will get this solved".
President Trump has recently imposed a 50% tariff on most US imports from India, a move designed to penalize India for its continued purchases of discounted Russian oil. The US president has significantly increased US tariffs on goods from much of the world since re-entering the White House in January, straining relations with economies of allies and rivals and fueling fears of higher inflation. Trump has also criticized the trade relationship as a "one-sided disaster," claiming that India's high tariffs have prevented American businesses from selling goods in the Indian market. He has also alleged that India buys most of its oil and military products from Russia, very little from the U.S. Trump has stated that India has offered to cut their tariffs to zero, but it's getting late.
Bessent, while acknowledging the strains, downplayed concerns about Prime Minister Narendra Modi's participation in a recent meeting with Russian President Vladimir Putin and Chinese President Xi Jinping. He characterized the Shanghai Cooperation Organisation (SCO) meeting as "largely performative," emphasizing that India's values are more aligned with the U.S. than with Russia or China. Bessent did, however, criticize India's continued purchases of Russian crude oil, arguing that it effectively helps fund the Kremlin's war in Ukraine. He cited slow progress in trade negotiations as a key reason for Washington's decision to raise tariffs on Indian goods.
The recent tariffs, which came into effect just after midnight on Wednesday in Washington, risk inflicting significant damage on the Indian economy and further disrupting global supply chains. The US has recently imposed a 25 per cent tariff on Indian goods, citing a sharp trade imbalance. In addition, it has levied another 25 per cent after India snubbed Washington's demand to cut oil trade with Russia, taking the total duty to 50 per cent. Some key products including smartphones are set to be spared, for now.
The effects of the tariffs are already being felt, with the Federation of Indian Export Organisations (FIEO) reporting that textile and apparel manufacturers in Tirupur, Delhi, and Surat have already halted production due to "worsening cost competitiveness". Rival exporters from Turkey to Thailand, facing lower US tariffs, are already scooping up American buyers with offers of cheaper goods. Ministers in India argue the country has been unjustly singled out for its trade relationship with Russia and officials caution the country will likely work more closely with Moscow and Beijing – and drift further from Washington – as a result.
Despite the tensions, both countries have signaled a willingness to continue trade talks. Jaishankar said, US-India trade talks continue. “We are two big countries, we need to have conversations … the lines are not cut,” he said. India and the US have been negotiating a bilateral trade agreement (BTA) since March, with five rounds of talks completed. The sixth round, scheduled for August 25, was deferred after the tariff hike. Washington is pressing for greater access to India's agriculture and dairy markets, while New Delhi seeks tariff reductions.
