In late January 2026, the global trade landscape shifted dramatically as India and the European Union (EU) finalized their long-awaited Free Trade Agreement, often called the “Mother of All Deals.” However, this historic moment has been met with sharp criticism from the United States. Scott Bessent, the newly confirmed US Treasury Secretary, has openly expressed his “disappointment” with the pact, creating a fresh wave of diplomatic tension between Washington, Brussels, and New Delhi.
Bessent’s remarks are not just a matter of words; they represent a significant shift in how the US views India’s trade relations with other global powers. As the top financial official in the Trump administration, Bessent is now the primary voice on US tariffs and sanctions, making his stance vital for Indian businesses and investors to understand.
Who is Scott Bessent?
Scott Bessent is a billionaire investor and former hedge fund manager who was confirmed as the US Treasury Secretary on January 27, 2026. A long-time ally of President Donald Trump, Bessent is known for his “America First” economic views. His role is to manage the US national debt, oversee the IRS, and serve as the President’s chief advisor on fiscal policy.
Since taking office, he has been tasked with a delicate mission: cutting taxes in the US while using tariffs as a tool to negotiate better deals for American companies. For India, Bessent is the man who holds the power to either remove or increase the heavy tariffs currently placed on Indian goods.
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The Source of Disappointment: Russian Oil and the EU Pact
The primary reason for Bessent’s recent criticism lies in the “backdoor” trade of Russian oil. The US currently imposes a 25% tariff on many Indian goods as a penalty for India’s continued purchase of Russian crude oil following the Ukraine conflict.
Bessent has accused European nations of being “hypocritical.” He argues that while the EU claims to support Ukraine, they are indirectly funding the Russian war effort by purchasing refined petroleum products from India. According to Bessent, these products are often made from the very Russian oil that the US and Europe are supposed to be sanctioning.
He recently stated that Europe is “financing the war against itself” by signing this trade deal with India instead of joining the US in imposing higher tariffs on New Delhi.
What the India-EU Deal Means for India
Despite the criticism from Washington, the India-EU Free Trade Agreement is a massive win for the Indian economy. The pact is expected to double Indian exports to Europe by 2032. Key Indian sectors like textiles, leather, footwear, and gems and jewelry will see their tariffs dropped to zero almost immediately.
For the Indian consumer, this deal could also mean cheaper European luxury goods, including cars and wines. Prime Minister Narendra Modi has hailed the agreement as a “new blueprint for shared prosperity,” emphasizing that it will create millions of jobs in India’s manufacturing and service sectors.
The “Path” to Removing US Tariffs
There is, however, a glimmer of hope for US-India relations. Despite his tough talk, Scott Bessent recently hinted that the US might consider rolling back the 25% “oil tariffs” on India. He noted at the Davos 2026 summit that Indian purchases of Russian oil have significantly declined in recent months due to US pressure.
Bessent described this reduction as a “huge success” for the Trump administration’s tariff policy. If India continues to scale down its energy ties with Russia, Bessent suggested there is a “path” to take the tariffs off, which would be a major relief for Indian exporters who currently face a total of 50% duties on certain products.
What Happens Next?
The next few months will be critical for India’s balancing act. India must manage its massive new trade relationship with Europe while trying to convince Scott Bessent and the US Treasury to drop punitive tariffs.
Indian trade officials are expected to meet with their US counterparts in Washington in February to discuss a potential “mini-trade deal.” The outcome of these talks will determine whether India can truly enjoy the benefits of its European deal without facing further retaliation from its largest trading partner, the United States.
Frequently Asked Questions (FAQs)
Why is Scott Bessent important for India?
As the US Treasury Secretary, Scott Bessent decides on the tariffs and taxes that affect Indian goods sold in America. His views on India’s trade with Russia and Europe directly impact the cost of Indian exports like textiles and electronics.
What is the “Mother of All Deals”?
This refers to the Free Trade Agreement (FTA) signed between India and the European Union in January 2026. It is called this because it is the largest and most comprehensive trade pact in India’s history, covering a vast range of goods and services.
Why is the US upset about India’s oil trade?
The US wants to cut off Russia’s income to stop the war in Ukraine. They are unhappy that India buys discounted Russian oil and that European countries buy the refined products made from that oil, which they believe bypasses the sanctions.
Will US tariffs on India be removed soon?
Scott Bessent has signaled that a rollback of the 25% tariff is possible because India has reduced its Russian oil imports. However, no official date has been set, and it will likely depend on future trade negotiations.
Is Scott Bessent an official yet?
Yes, Scott Bessent was formally confirmed by the US Senate on January 27, 2026, and officially took office as the Treasury Secretary the following day.