The US might reconsider removing the extra 25 percent tariffs levied on Indian imports in response to New Delhi’s importation of Russian oil, according to US sources, who say those penalties have already achieved their aim.
In fact, US Treasury Secretary Scott Bessent said that the purchase of oil by Indian refineries from Moscow had “collapsed” after the tariffs introduced by former President Trump, hinting that there may be an option to lift the tariff.
While speaking to Politico outside the World Economic Forum annual meeting in Davos, Switzerland, Bessent termed the decision a policy success.
We put a 25 per cent tariff on India for buying Russian oil, and the Indian purchases by their refineries of Russian oil have collapsed. So that is a success. The tariffs are still on, but I would imagine there is a path to take them off,” he said.
US claims, tariffs prompted India to diversify oil sources
Bessent claimed that the trade pressure exerted by the Americans led to a shift in India’s energy imports due to the invasion of Ukraine by Russia. Before the invasion of Ukraine by Russia, only 2 to 3 percent of crude oil refined in India originated from Russia; this figure increased to the high teens due to discounted oil being available in the market.
According to the statement by Washington, the move has made India “gear down” purchases, while lawmakers in the US are weighing a potentially more drastic measure that can include a 500 percent rate to deter countries from buying crude from Russia.
India, on the contrary, has negated this approach altogether because New Delhi feels that the choices being taken regarding energy consumption policies in the country are being taken on the basis of the energy needs for its 1.4 billion people rather than the geopolitical factors governing the situation.
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India Responds to new threats of sanctions
On the proposed sanctions bill, the spokesperson of the Ministry of External Affairs, Randhir Jaiswal, simply said that the monitoring was being conducted “closely”.
We are aware of this proposal to introduce a bill and are following the situation, he said, again reiterating India’s stand on measures that were considered to be “unfair, unjustified, and unreasonable.
Instead, Bessent aims at Europe instead of refined oil.
He also condemned the European nations by referring to them as indirectly financing the war efforts of Russia by buying their refined petroleum products from India.
He termed it an “act of irony and stupidity,” and stated that while making public statements against Russia oil in large volumes, Europe itself was importing oil refined in India, which was obtained from their resources.
The statement has been issued only a few days prior to when European leaders along with European Commission President Ursula von der Leyen will visit India to attend the 16th India-EU Summit during which talks of a free trade agreement are set to be held.
Trade tensions remain unresolved
While the 25% tariff may be fluid, the overall issue of contention in the overall trade relations between the USA and India is much larger. As a result of the tariffs introduced by the administration of Trump, overall tariffs on Indian goods are now close to 50%, while senior members continue to advance the idea thatIndia is a high-tariff nation and an outlier in their relations with Russia.
Thus far at least, Washington’s message is conditional: If India’s Russian oil imports remain low, then this door may remain open. The extent to which this ‘path’ will inform US–India policy will depend upon several variables.
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