Amidst escalating trade tensions between the United States and India, US Treasury Secretary Scott Bessent expressed optimism on Tuesday, stating his confidence that the two nations would resolve their current disputes. Bessent's remarks come in the wake of the Trump administration's decision to impose tariffs as high as 50% on goods imported from India, a move that has sparked considerable concern and debate.
The imposition of tariffs stems, in part, from Washington's displeasure with New Delhi's continued purchase of Russian oil, despite the ongoing war in Ukraine. The U.S. has argued that India's oil imports are indirectly funding Russia's military efforts. Bessent himself criticized India for "not being great actors" in buying Russian oil and potentially reselling it, thus "financing the Russian war effort in Ukraine".
Adding to the friction, President Trump has repeatedly criticized the trade relationship between the U.S. and India, characterizing it as "one-sided" and a "disaster" for the United States. He has claimed that India's high tariffs have historically prevented American businesses from accessing the Indian market. Trump recently stated that India had offered to cut tariffs to zero, but he also added that "it's getting late".
Despite these criticisms and the imposition of tariffs, Bessent struck a more conciliatory tone, emphasizing the strong foundation and shared values between the two democracies. Speaking to Fox News, he downplayed the significance of Prime Minister Narendra Modi's recent meeting with Russian President Vladimir Putin and Chinese President Xi Jinping at the Shanghai Cooperation Organisation (SCO) summit. Bessent described the SCO gathering as "largely performative," reiterating that India's values align more closely with the U.S. than with Russia or China.
The recent escalation in trade tensions marks a challenging moment in U.S.-India relations. Bilateral trade between the two countries totaled an estimated $212.3 billion in 2024, an increase of 8.3% from the previous year. However, the U.S. has a goods trade deficit with India, which stood at $45.8 billion in 2024. The imposed tariffs threaten to disrupt established supply chains and negatively impact sectors reliant on the American market, such as textiles, gems, jewelry, and seafood. The Federation of Indian Export Organisations (FIEO) has reported that some Indian manufacturers have already halted production due to decreased cost competitiveness.
Experts have warned that sustained tariffs could push India's GDP growth below 6%. Concerns have also been raised about the potential impact on strategic cooperation between the U.S. and India, particularly in the context of the Quadrilateral Security Dialogue (Quad), which aims to counterbalance China's regional influence.
Despite the current challenges, Bessent's remarks suggest that the U.S. hopes to find a path toward resolving trade frictions with India. He acknowledged India's concerns about affordable energy for its population of 1.4 billion people. Finding a mutually acceptable solution will be crucial to maintaining a strong and multifaceted relationship between these two major global powers.
