The US said India could be slapped with a higher tariff rate if Donald Trump’s summit with Vladimir Putin failed to end the war in Ukraine.
Washington hit New Delhi with a 25 per cent import tariff on 31 July and then a 25 per cent penalty on 6 August primarily for its continued purchase of Russian crude oil, bringing the effective rate to a steep 50 per cent.
US treasury secretary Scott Bessent said Washington could hike the secondary tariff imposed on India after Mr Trump warned of “very severe consequences” if a ceasefire deal was not reached in Alaska on Friday.
“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,” Mr Bessent told Bloomberg TV on Wednesday.
“President Trump is meeting with President Putin, and the Europeans are in the wings carping about how he should do it, what he should do. The Europeans need to join us in these sanctions. The Europeans need to be willing to put on these secondary sanctions.”
Mr Trump is travelling to Anchorage, Alaska, on Friday for a high-stakes meeting with the Russian leader. He says the talks are aimed at “setting the table” for a follow-up summit involving Ukraine as well.
On Wednesday, Mr Trump threatened “severe consequences” if Mr Putin didn’t agree to a truce in Ukraine but did not specify what the consequences could be or for whom.
“There will be, I don’t have to say, there will be very severe consequences,” Mr Trump said at the Kennedy Centre in Washington after Ukrainian president Volodymyr Zelensky suggested, in a virtual meeting with the US president, that Mr Putin was bluffing about seeking peace.
Mr Trump has been attacking India in recent days for its refusal to stop buying oil from Russia. He has accused India of financing Russia’s war in Ukraine by purchasing discounted crude from Moscow.
India has responded that it needs cheap oil to meet the energy needs of its fast-growing economy.
India has been sourcing nearly a third of its oil needs from Russia since the Ukraine war began in early 2022. It is now the second-largest importer of Russian crude after China.
In an unusually sharp response, India accused the US of hypocrisy in punishing it for buying Russian oil while continuing to buy Russian uranium hexafluoride, palladium and fertiliser itself.
Narendra Modi’s government called the US tariffs “unfair, unjustified and unreasonable” and vowed to “take all actions necessary to protect its national interests”.
On Thursday, India’s foreign ministry said it hoped relations with the US would move forward based on mutual respect and shared interests.
For India, the steep US levies threaten to disrupt access to its largest export market where its shipments totalled nearly $87bn (£65bn) in 2024, hitting sectors like textiles, footwear, gems and jewellery.
The increased levies place Indian exporters at a 30-35 per cent disadvantage versus rivals in Bangladesh, Vietnam, and Japan, according to Reuters.
It is also expected to shake up India’s employment sector, with millions of jobs on the line in textiles, gems, leather and chemicals companies.
Talks for a trade deal have been ongoing for several months. It is believed that India’s reluctance to reduce duties on agriculture and dairy is a major sticking point in reaching an agreement.
