• US Treasury Secretary Scott Bessent warns of additional tariffs or sanctions if India does not curb its purchases of Russian crude oil.
  • The threat escalates existing trade tensions, with the US already imposing a 50% tariff on some Indian goods.
  • The move is part of a broader effort to pressure European allies to align their sanctions enforcement and stop buying refined Indian products made with Russian oil.

US Treasury Secretary Scott Bessent has threatened to further increase tariffs on Indian goods, a significant escalation in the administration’s campaign to pressure New Delhi over its continued purchase of Russian oil. The warning, delivered this week, signals that failure to curb these imports could result in even steeper tariffs or direct sanctions, according to people familiar with the matter.

The threat comes amid a delicate diplomatic moment, following the recent Alaska summit between former President Trump and Russian President Vladimir Putin. Administration officials have argued that economic pressure, including on third countries like India, was instrumental in bringing Russia to the negotiating table. However, with the summit failing to yield an immediate breakthrough on Ukraine, the focus has shifted back to tightening the sanctions net.

“The message was clear: the current 50% tariff is not the ceiling if the oil flows don’t stop,” said one source briefed on the discussions, who asked for anonymity due to the sensitivity of the talks. The existing tariffs have already made a range of Indian exports, from steel to manufactured goods, significantly more expensive in the US market, threatening a key source of hard currency for the Indian economy.

A central pillar of the US strategy is now focused on closing what officials see as a major loophole: European purchases of refined oil products from Indian refineries that use Russian crude. Publicly and privately, Bessent has accused European partners of undermining the West’s united front. He has called on them to impose matching measures to stop the flow of what the administration considers to be effectively Russian oil.

The pressure has sparked a trans-Atlantic debate over the burden of sanction enforcement. White House trade adviser Peter Navarro recently argued in a public editorial that India cannot simultaneously court a US strategic partnership while “acting as a global clearinghouse for Russian oil.” This rhetoric suggests a hardening stance that prioritizes sanctions compliance over other diplomatic considerations.

For Indian businesses, particularly major energy exporters and steel producers, the uncertainty is causing significant strain. Company executives report difficulty in planning exports and securing financing, with some international banks becoming wary of facilitating trade that might attract US scrutiny. The threat of further tariffs compounds existing pressures from shifting global financial conditions, including the potential for higher costs on foreign currency loans.

The Treasury Department did not immediately respond to a request for comment. A spokesperson for the Indian embassy in Washington declined to comment on the specific tariff threat but reiterated India’s position that it must source energy at the most competitive rates to support its growing economy.

The immediate outlook points toward continued friction. Diplomatic efforts are ongoing, but without a deal that satisfies the US on oil imports, the economic penalties appear set to rise, testing the resilience of the US-India strategic partnership and potentially forcing a realignment of global energy supply chains.