A major diplomatic and economic tug-of-war has erupted involving India, the United States, and the European Union. Scott Bessent, the United States Treasury Secretary, has openly criticized the newly finalized India-EU Free Trade Agreement (FTA).
Speaking in interviews this week (late January 2026), Bessent expressed strong disappointment with European nations for signing a “mother of all deals” with India instead of joining the US in imposing strict tariffs. At the same time, he offered a potential “good news” signal for India regarding the removal of the controversial 25% tariff on Indian goods.
Here is a simple breakdown of what Scott Bessent said, why he is angry with the EU, and what this means for the Indian economy.
Who is Scott Bessent?
Scott Bessent is the current US Treasury Secretary under the Donald Trump administration (Trump 2.0). A former hedge fund manager and economic advisor, he is a key figure in shaping America’s “America First” economic policy. He plays a major role in deciding tariffs (taxes on imported goods) and managing the US dollar’s strength.
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What is the Controversy?
The core issue revolves around Russian oil and the war in Ukraine.
- The US Stance: The US government has imposed a 25% punitive tariff on India. Why? Because India continued to buy crude oil from Russia despite Western sanctions.
- The EU’s Move: Instead of joining the US in punishing India with tariffs, the European Union (EU) went ahead and finalized a historic Free Trade Agreement with India on January 27, 2026.
Bessent’s Criticism of Europe
In an interview with CNBC and Politico, Scott Bessent attacked the European Union’s decision. He argued that by signing a trade deal with India, Europe is indirectly funding Russia.
- The Loophole: He explained that India buys Russian crude oil, refines it into diesel/petrol, and then sells those refined products to Europe.
- The Quote: Bessent said, “The Europeans were unwilling to join us [in tariffs]… simply because they wanted to do this trade deal. They are financing the war against themselves.”
He called out European leaders for putting “trade ahead of the Ukrainian people.”
The “Good News” for India: Tariff Removal?
Despite the tough talk against the EU, Scott Bessent softened his stance toward India directly.
He claimed that the US pressure has worked. According to Bessent, India’s purchase of Russian oil has “collapsed” (reduced significantly) due to the 25% tariff. Because of this “success,” he hinted that the US might now remove the 25% tariff.
“The tariffs are still on. I would imagine there is a path to take them off now. So that’s a check and a huge success,” Bessent stated at the World Economic Forum in Davos.
Is this true? While Bessent claims Indian imports of Russian oil have stopped, Indian reports suggest they have only reduced or shifted. However, his statement is a positive sign that the extra tax on Indian exporters might be lifted soon.
Why This Matters for India
This situation places India in a very delicate but powerful spot:
- Economic Boost: The India-EU trade deal is expected to be a game-changer, potentially doubling exports to Europe by 2032.
- US Relations: India must manage the US administration carefully. If the US removes the 25% tariff, it will be a massive relief for Indian IT, pharma, and textile sectors that export to America.
- Oil Prices: If India is forced to stop buying discounted Russian oil completely to please the US, fuel prices in India could rise.
What Happens Next?
- Official Tariff Announcement: Indian exporters are waiting for an official notification from the US Treasury Department to see if the 25% duty is actually removed.
- EU Deal Implementation: The India-EU deal will now go through legal reviews before coming into full force.
- Diplomatic Talks: Indian officials will likely hold talks with Scott Bessent and the Trump administration to ensure the new EU deal does not damage relations with Washington.
Frequently Asked Questions (FAQs)
Q1: Why did the US impose a 25% tariff on India?
The US imposed this extra tax to punish India for buying crude oil from Russia, which the West has sanctioned due to the Ukraine war.
Q2: Did India stop buying Russian oil?
Scott Bessent claims India has stopped or significantly reduced these purchases. However, India maintains that it buys oil based on its national energy security and gets the best price available.
Q3: What did Scott Bessent say about the EU?
He called the EU “disappointing” and accused them of prioritizing money over the war in Ukraine by signing a trade deal with India instead of sanctioning it.
Q4: Will the 25% tariff be removed?
Bessent has hinted that there is a “path to take them off” because he believes the policy was successful. However, no official date has been set yet.
Q5: Is Scott Bessent the US Treasury Secretary?
Yes, Scott Bessent was confirmed as the US Treasury Secretary in January 2025 under President Donald Trump.