"They badly want to bite us, but their opportunities are limited," Putin said. "If they try to punish us by putting us into a corner on our knees like naughty children, they will cut the branch they are sitting on."
He admitted that Russia and the U.S. have lost mutual trust, and said that Washington should renounce "double standards and lies" to restore it.
Putin also took a video question from National Security Agency leaker Edward Snowden, whom Russia granted asylum last year. Asked by Snowden about Russia's surveillance programs, Putin said that Russian special services also tap on communications in their fight against terrorism, but don't do it on such a massive scale as the U.S.
He said that Russia will further develop ties with China, a natural ally which he said is set to become the world's No. 1 economic power.
While offering scathing criticism of the West, Putin said that Russia hopes that ties will eventually normalize and insisted that Moscow has no intention to draw a new Iron Curtain.
He even tried to infuse a bit of warmth to the chill over Ukraine, picking up a question from a 6-year-old girl who asked if he thinks President Barack Obama would rescue him if he was drowning.
"He's a decent and brave man. He would do it," Putin said.