Potential US Tariff Increase on India Linked to Outcome of Trump-Putin Ukraine Peace Talks
The United States has issued a warning about the possibility of increased secondary tariffs on India if the forthcoming peace discussions between US President Donald Trump and Russian President Vladimir Putin do not make progress on the Ukraine conflict.
US Treasury Secretary Scott Bessent mentioned on Bloomberg TV on Wednesday, “We’ve put secondary tariffs on Indians for buying Russian oil. And I could see, if things don’t go well, then sanctions or secondary tariffs could go up.”
Earlier in the month, the Trump administration had already implemented a 25% penalty on India in addition to an existing 25% tariff on the purchase of Russian oil and weapons. These measures form a part of Washington's strategy to pressurize Moscow into agreeing to a ceasefire. Trump has cautioned of “severe consequences” should Russia refuse to accept a peace agreement.
The crucial meeting between Trump and Putin is scheduled for Friday in Anchorage, Alaska, with European allies urging for stronger coordinated sanctions. Bessent criticized Europe for “carping from the wings” instead of fully joining US efforts.
India's imports of Russian crude have increased significantly, rising from 3% of total imports in 2021 to nearly 40% in 2024. New Delhi defends these purchases as critical for obtaining affordable energy for millions of its citizens.
Trade tensions between India and the US have been escalating, with Trump referring to India as a “tariff abuser” and aiming to reduce the $45 billion trade deficit. Negotiations have reached an impasse over disagreements concerning agricultural and dairy tariffs.
A new 50% tariff rate on India, which is set to be implemented on August 27, 2025, would position India as the most heavily taxed US trading partner in Asia. Economists caution that this move could impact India’s export-driven industries, such as textiles and jewellery, potentially reducing GDP growth by up to 0.5%.
