India-US Trade Tensions: 25% Extra Penalty on India over Deal and Tariff with Russia, Modi did not even take up Trump’s call
New Delhi/Washington, 27 August 2025 – India-US trade tensions have become even more heated now, when America has imposed an extra penalty tariff of 25% on India. The reason behind this is India’s continued import of Russian oil and defense equipment. But amidst all this, US Treasury Secretary Scott Bessent has expressed confidence in the strong ties between the two countries.
In an interview given to Fox Business, Bessent said, “India is the world’s largest democracy and the US is the world’s largest economy. In the end, we will find a solution together.”
Trade deal not yet finalised, Bessent calls India’s talks “performative”
Bessent also said the trade deal has been in talks for quite some time, but there is no final agreement yet. He said India has taken a “measured” and “performative” approach, which is much slower than the expected timeline – May or June.
“Indians came early to negotiate after the Liberation Day, but the deal is not yet finalised. They only delayed and took advantage of Russian crude,” – Bessent.
Russian Oil and Defence Purchase: Main Issue
America has been repeatedly raising the point that India is importing cheap oil and defence systems from Russia, which goes against the sanctions of the West. This is the reason for the new penalty tariffs of the US.
Trump-Modi’s Chemistry Strong, But Problems Increased
Bessant said that there is a good rapport between President Donald Trump and PM Narendra Modi at a personal level. “The relationship at the top level is strong, but it is not just about Russian oil,” she clarified.
US worried about trade deficit, accuses India of high tariffs
Bessant also called India’s high tariffs and US’ trade deficit a big issue. He repeated Trump’s stance and said:
“When there is a schism in trade, the deficit country is at an advantage. Surplus countries should be tense. India sells to us, their tariffs are high and they also have a trade surplus with us.”
India’s Strong Response: Modi Ignored Trump’s 4 Calls
According to a German newspaper Frankfurter Allgemeine Zeitung (FAZ), PM Modi has ignored President Trump’s calls 4 times in recent weeks. This signals that Modi is not only serious about this issue, but is also not going to succumb to US pressure.
PM Modi made it clear that he will never compromise on the interests of farmers. This is also a strong domestic signal.
US has no fear of Rupee Trade: Bessent
When asked if India’s trade settlement in Rupee is a threat to the US dollar, Bessent said:
“There are tensions about many things, but Rupee becoming a reserve currency is not one of them.” He also added that Rupee is at an all-time low against the dollar.
Conclusion
These India-US trade tensions are not just limited to tariffs or oil, but are part of a larger geopolitical strategy. While India wants to maintain its independent foreign policy, the US wants India to align with its trade and defence positions.
We will decide in the next few weeks whether both countries will come back to the negotiation table or this tension will increase further.