US Treasury Warns of Higher Secondary Tariffs on India if Trump-Putin Alaska Talks Fail

Moneylife Digital Team 14 August 2025

Economy & Nation

US treasury secretary Scott Bessent has warned that Washington could impose higher secondary tariffs on India, depending on the outcome of president Donald Trump’s meeting with Russian president Vladimir Putin in Alaska on Friday.

“We have 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.

The warning comes amid escalating trade tensions between New Delhi and Washington. Earlier this month, president Trump imposed a 25% penalty on India, in addition to an existing 25% tariff, for continuing to buy Russian oil and weapons. The combined 50% tariff rate is set to come fully into effect on 27 August 2025.

The US has been pushing for a ceasefire between Russia and Ukraine. President Trump has warned of 'severe consequences' if Moscow refuses a peace deal. Friday’s Anchorage meeting will focus on ending the war, with president Trump urging European nations to back Washington’s sanctions push.

“The Europeans need to join us in these sanctions… They need to be willing to put on these secondary sanctions,” Mr Bessent says.

India’s discounted crude imports from Russia have surged since the start of the Ukraine conflict, rising from just 3% of total imports in 2021 to 35%–40% in 2024. The US says these purchases undermine its sanctions regime; New Delhi argues that, as a major energy importer, it must buy the cheapest available crude to shield millions from high costs.

Mr Bessent’s comments follow remarks on Fox Business a day earlier, where he described India as 'a bit recalcitrant' in ongoing trade talks. “The big trade deals that aren’t done or agreed — Switzerland is still around, India has been a bit recalcitrant,” he says.

Trade negotiations have been underway for several months, with US negotiators set to arrive in India on 25 August 2025 for the sixth round of talks. Washington is pushing for lower Indian tariffs on agriculture and dairy imports — a sticking point that experts say has stalled progress.

Half of president Trump’s 50% tariff rate has already been in force since 7 August 2025. According to India’s finance ministry, around 55% of the value of Indian merchandise exports to the US will be hit once the full rate applies.

Analysts warn that the steep duties — the highest on any Asian US trading partner — could cripple India’s export-focused industries such as textiles and jewellery, and may shave up to half a percentage point off gross domestic product (GDP) growth.

The tariff dispute is unfolding ahead of prime minister (PM) Narendra Modi’s planned visit to New York next month for the United Nations (UN) general assembly, where president Trump is also scheduled to speak on 23 September 2025. This would be PM Modi’s second US trip this year, following a February bilateral meeting at the White House.

Despite the tensions, India’s ministry of external affairs has called the tariffs 'unjustified and unreasonable' but stressed that India-US ties remain broad-based, with trade only one aspect of the relationship.