Just as India and the European Union (EU) moved closer to finalising a long-awaited Free Trade Agreement (FTA), the United States has renewed allegations that India’s oil trade with Russia is indirectly funding the war in Ukraine — a conflict largely backed by Europe.
US Treasury Secretary Scott Bessent claimed that Washington has imposed steep tariffs on India over its continued purchase of Russian crude, even as European nations benefit from refined fuel products exported from India.
“We have put 25 per cent tariffs on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India,” Bessent said in an interview on Sunday (US local time).
While the India-EU FTA has not yet been formally signed, it has been declared “finalised for legal scrubbing of the text” following negotiations in New Delhi.
US Slaps 50% Tariffs on India Over Russian Oil
The Trump administration has imposed a cumulative 50 per cent tariff on Indian goods, including an initial 25 per cent levy and an additional 25 per cent specifically linked to India’s energy ties with Moscow.
Bessent alleged that European countries are effectively “financing a war against themselves” by purchasing refined petroleum products made in India using Russian crude oil.
“To be clear, Russian oil goes into India, refined products come out, and the Europeans buy those products. They are financing the war against themselves,” Bessent said, adding that under President Donald Trump’s leadership, the US would eventually bring the Russia-Ukraine war to an end.
He also claimed that the United States has made “much bigger sacrifices” than Europe in its efforts to resolve the conflict.
India-EU FTA: ‘Mother of All Deals’
India and the EU are expected to formally announce the conclusion of FTA negotiations on January 27, marking the end of talks that began in 2007.
European Commission President Ursula von der Leyen, currently on an official visit to India and the chief guest at the 77th Republic Day celebrations, described the agreement as the “mother of all deals.”
The trade pact is seen as a major boost to India-EU economic ties at a time of global trade disruptions triggered by rising US tariffs.
Trump Sends Republic Day Greetings Amid Trade Tensions
Despite the escalating trade friction, President Donald Trump extended greetings to India on Republic Day, highlighting the democratic ties between the two nations.
“On behalf of the people of the United States, I extend my heartfelt congratulations to the government and people of India as you celebrate your 77th Republic Day. The United States and India share a historic bond as the world’s oldest and largest democracies,” Trump said in a message shared by the US embassy in India on X.
Republican Senator Claims White House Blocking India Deal
Meanwhile, internal dissent within Trump’s own Republican Party has surfaced. Senator Ted Cruz reportedly accused the White House of blocking a potential trade deal with India.
According to leaked audio recordings reported by Axios, Cruz told donors that he and other Republicans tried to persuade Trump against imposing sweeping tariffs in April last year.
“You’re going to lose the House, you’re going to lose the Senate, you’re going to spend the next two years being impeached every single week,” Cruz allegedly warned Trump about the political fallout of the tariffs.
Trump initially imposed 25 per cent tariffs on India in early 2025, later doubling them to 50 per cent in August, citing New Delhi’s continued trade with Russia.
Canada Also Pivoting Towards India
India’s growing importance is not limited to Europe. Canada is also recalibrating its foreign and trade policy, increasingly viewing India as a key strategic partner amid mounting pressure from Washington.
Under Prime Minister Mark Carney, Canada is seeking to reduce its dependence on the US after facing a 35 per cent tariff on Canadian goods, with threats of a potential 100 per cent tariff if Canada is seen as a transit hub for Chinese exports.
Ottawa is aiming to double its non-US exports within a decade and has accelerated talks with India on a Comprehensive Economic Partnership Agreement (CEPA), targeting $50 billion in bilateral trade by 2030.
Carney is expected to visit India in March to sign agreements covering uranium, energy, critical minerals and artificial intelligence.
This diplomatic thaw follows strained ties during former Prime Minister Justin Trudeau’s tenure, marked by tensions over the killing of a Sikh separatist leader.
Analysts say India offers Canada a stable democratic partner and a strategic counterweight to US dominance in the Indo-Pacific, while India sees an opportunity to secure energy supplies and expand access to North American markets amid rising US trade barriers.