Will US finally ease tariff pressure on India? Bessent’s ‘there is a path’ remark sparks fresh market hope
A fresh signal from Washington has revived optimism around India–US trade ties, after US Treasury Secretary Scott Bessent suggested that the 25 percent punitive tariff imposed on India for buying Russian oil could potentially be rolled back. For investors and market participants tracking geopolitics, currency moves and export-linked stocks, the comment is being read as more than just diplomacy — it hints at a possible reset in bilateral trade sentiment.
Speaking to Politico on the sidelines of the World Economic Forum in Davos, Bessent acknowledged that India’s purchases of discounted Russian crude have “collapsed”, adding that this shift could justify a rethink of the tariff imposed under the Trump administration.
“We put 25% tariffs on India for buying Russian oil, and the Indian purchases by their refineries… have collapsed,” Bessent said.
“I would imagine there is a path to take them off.”
Why the 25% tariff was imposed and why it now matters again
The tariff was originally introduced by the Trump administration to discourage India from increasing its intake of Russian crude after the Ukraine invasion. According to Bessent, Indian refiners had earlier ramped up purchases of discounted Russian oil, prompting Washington to use tariffs as a pressure tool.
That policy, Bessent now claims, has worked.
By acknowledging that India’s Russian oil purchases have since reduced sharply, the US Treasury Secretary has effectively indicated that the original objective of the tariff has been met. For investors, this is significant because it changes the tone of the India–US economic conversation from confrontation to recalibration.
He also pointed out that the US’s European allies chose not to impose similar punitive duties on India because they were keen to secure a large trade deal with New Delhi — an indirect admission that geopolitical pragmatism is beginning to outweigh rigid policy positions.
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The larger tariff overhang still remains on Indian exports
Despite the positive tone, the reality for Indian exporters remains complex. India is still facing cumulative tariffs of up to 50 percent on certain exports to the US. In August 2025, Trump had doubled duties on Indian imports to 50 percent, explicitly citing India’s continued energy ties with Russia as justification.
That move had created anxiety across export-heavy sectors such as:
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Textiles and garments
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Engineering goods
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Auto components
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Pharmaceuticals
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Specialty chemicals
However, Bessent’s comments suggest that at least part of this tariff structure — particularly the 25 percent linked to Russian oil purchases — could now be up for reconsideration.
Trump’s softer tone on India adds another layer to the narrative
Interestingly, the latest signal from Bessent comes at a time when Donald Trump himself has been projecting a more conciliatory tone towards India.
Speaking exclusively to Moneycontrol in Davos, Trump described Prime Minister Narendra Modi as a close friend and expressed confidence that a trade agreement would eventually be reached.
“I have great respect for your Prime Minister. He’s a fantastic man and a friend of mine,” Trump said.
For markets, such statements are not just optics. They feed into expectations around trade negotiations, tariff easing and long-term economic cooperation — all of which influence currency, capital flows and equity valuations.
Here’s what happened today and why traders reacted
In market circles, Bessent’s remarks quickly entered trading room conversations. While there was no immediate headline-driven rally, traders highlighted three clear reactions:
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Export-oriented stocks saw selective buying interest, especially in textiles, chemicals and engineering names that have been sensitive to tariff risk.
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The rupee, which has been under pressure due to FII outflows and trade uncertainty, found mild support as currency traders factored in improved external sentiment.
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Options data showed reduced aggressive bearish bets on export-heavy sectors, reflecting a shift from outright pessimism to cautious optimism.
One derivatives trader summed it up: “This is not a tariff rollback yet, but it is the first credible signal that the US may want to de-escalate. That changes the risk perception.”
What impact could a tariff rollback have on markets in the coming days?
If the US follows through with even a partial rollback of the 25 percent tariff, the implications could be meaningful across asset classes.
Potential market impacts include:
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Improved earnings outlook for exporters exposed to US demand
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Stronger investor confidence in sectors like textiles, pharma and auto ancillaries
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Support for the rupee by easing external account pressures
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Better FII sentiment toward India as geopolitical risk perception moderates
Equity strategists note that Indian markets are currently struggling with multiple headwinds — weak global risk appetite, sustained foreign outflows, and currency volatility. Any credible improvement in trade relations with the US could act as a counterbalance to these pressures.
What this means for investors and portfolios
For investors, the key takeaway is not to chase headlines, but to understand direction of policy.
Bessent’s comment signals:
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A possible shift in US policy stance towards India
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Recognition that punitive tariffs may have outlived their original purpose
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A renewed window for India–US trade negotiations
Portfolio implications could include:
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Gradual re-rating potential for export-heavy stocks if policy clarity improves
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Reduced downside risk for sectors that were earlier pricing in worst-case tariff scenarios
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Tactical opportunities in companies with strong US revenue exposure but solid fundamentals
However, market experts caution that until there is formal policy action, volatility will remain.
Why this moment feels different from earlier trade noise
What makes this development noteworthy is that it is coming from the US Treasury Secretary, not just from political rhetoric. Bessent explicitly acknowledged policy effectiveness and hinted at reversal — a rare admission in global trade diplomacy.
For investors tracking macro cues, this shifts the conversation from speculation to possibility.
As one fund manager put it, “We’ve heard talk before. But when the US Treasury Secretary says ‘there is a path’, markets listen differently.”
