Efforts Underway To Resolve Tariff Discord With US: Government Sources

After an additional 25 per cent tariff as penalty for India's purchase of Russian oil came into effect on Wednesday, government sources have said that efforts are underway to resolve the ongoing discord between India and the US. They said that the current situation is a temporary one in an otherwise long-term relationship between the two countries.

They further stated that exporters do not need to panic as the impact of US tariffs are unlikely to be severe. This is because of India's diversified export base. Total tariffs on India now reach as high as 50 per cent, sharing top spot with Brazil.

Two-thirds of India's exports to the US - worth over $60 billion annually - are now in the tariff net. 

According to the US Department of Homeland Security, the higher rate will apply to all Indian goods that "entered for consumption or withdrawn from warehouse for consumption" on or after this time.

Yesterday in an interview to Fox News, US Treasury Secretary Scott Bessent has expressed confidence in India-US ties. In an interview to Fox Business, he said, "I do think India's the world's largest democracy, the US is the world's largest economy. I think at the end of the day we will come together."

Bessent also explained that US President Donald Trump and Prime Minister Narendra Modi have a "very good rapport at the top level". He said, "This is a complicated relationship. President Trump and Prime Minister Modi have a very good rapport at the top level, but it's not just about Russian oil."

Regarding bilateral trade, Bessent reiterated Trump's stance and said that US had a large trade deficit with India and when there is a "schism" in trade relations, the 'deficit' country is at an advantage and the 'surplus' country "should worry".

"The US is the deficit country. When there is a schism in trade relations, the deficit country's at an advantage. It's the surplus country that should worry. So, the Indians are selling to us. They have very high tariffs and we have a very large deficit with them," the Treasury Secretary said.

Back home, New Delhi has asserted that it is prepared to stand firm against US pressure, with PM Modi vowing he would "never compromise" the interests of the country's farmers.

PM Modi refused to take four calls from American President Donald Trump in recent weeks, against the backdrop of the tariff row, German newspaper Frankfurter Allgemeine Zeitung (FAZ) has reported, citing sources. The report suggests that this was the result of the "depth of his [Modi's] anger, but also his caution".