Washington, D.C. - In a move signaling a potential thaw in trade relations, the United States government, under the Trump administration, has indicated it may consider rolling back a 25% tariff on goods imported from India. This development comes in light of what US Treasury Secretary Scott Bessent described as a "sharp reduction" in India's crude oil purchases from Russia in recent months. The announcement could mark a significant shift in the trade dynamics between the two nations, who have been navigating a complex relationship in recent years.
The tariffs in question were initially imposed in two stages. The first 25% duty was placed on India in response to what the U.S. deemed were trade imbalances. A further 25% levy was introduced as a punitive measure after India continued to import crude oil from Russia, even as the U.S. and other Western nations sought to exert economic pressure on Moscow following its invasion of Ukraine. This doubling of tariffs occurred in August of last year.
Speaking to Politico at the World Economic Forum in Davos, Secretary Bessent stated that India's reduced reliance on Russian oil had created conditions that could allow for the easing of at least 25% of the tariffs levied on Indian goods. He went on to say that the initial tariff strategy had been successful, stating, "Our 25 percent tariff on India has been a huge success. Indian purchases of Russian oil have collapsed". He further added, "I would imagine there is a path to take them off now".
Bessent also commented on the European Union's trade relationship with India, noting that the EU had refrained from imposing similar tariffs, allegedly because they were pursuing a significant trade agreement with New Delhi. He characterized this approach as "stupid" considering that Europeans were purchasing refined energy products from India, which were, in turn, made from Russian oil.
While the tariffs remain in place for now, Bessent's statements suggest a willingness within the Trump administration to reconsider the trade barriers, especially given India's apparent responsiveness to U.S. pressure regarding Russian oil imports. It is important to note that Indian authorities have stated that while some private refiners have reduced their Russian oil imports, imports from Russia are still ongoing.
The potential rollback comes amidst ongoing trade negotiations between India and the United States. The outcome of these discussions remains to be seen, but the signal from Washington suggests a possible shift towards a more cooperative trade environment, contingent on India's continued alignment with U.S. strategic goals regarding Russia.
