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The sudden escalation in U.S. trade tariffs against India has laid bare the deepening fissures in what was once hailed as a burgeoning strategic partnership. President Donald Trump’s decision to impose a 25% additional tariff on Indian goods, citing New Delhi’s continued purchase of discounted Russian oil has set off alarm bells in both capitals, overshadowing years of economic and defense cooperation.
Trump’s 25% tariff targets over half of India’s exports to the U.S., hitting labor-intensive sectors hardest.
It is timely. Scarcely months from a supposedly warm Trump-Modi meeting, Washington’s tone has so squarely shifted towards belligerence. Trump has branded India’s economy “dead,” condemned its “obnoxious” trade hurdles, and blamed it for cannibalizing Western sanctions by siphoning Moscow’s wartime oil discounts. It is a sharp reversal from symbol-of-homeliness bonhomie to tension at policy levels.
The three-week tariffs are to fund more than half of India’s exports to the U.S. especially in labor-intensive industries such as textiles, leather, and gems. Industry leaders threaten huge job cuts and order book destruction as Indian officials desperately attempt to save talks. There is a chance that the 21-day period provides a diplomatic off-ramp, which will be in the shape of a slow decline in Russian oil imports.
But political symbolism is hard to avoid. Trump’s move is a prima facie gesture in the direction of India and other energy consumers like China, ahead of the August 12 deadline for the U.S.-China trade truce to expire. India is in the hot seat now, but Treasury Secretary Scott Bessent’s statement suggests that Beijing will be next in the crosshairs at some point in the future.
The move is linked to India’s continued purchase of discounted Russian oil despite Western sanctions.
New Delhi has struck back in kind gingerly. The foreign office condemned the action “extremely unfortunate,” but avoided direct confrontation or tit-for-tat reprisal. The government is instead reported to be making arrangements for relief packages to affected exporters and considering strategic diversification of energy supplies to alleviate pressure.
As Prime Minister Modi is set to make a historic visit to China after seven and a half years, watchers are waiting with bated breath if India would be reversing foreign policy because long term decoupling from America is being seen. If New Delhi decouples with America long term, it would rebalance with other economic centers like the BRICS bloc in a move that would redefine regional power.
India has condemned the tariffs but avoided direct retaliation, focusing on exporter relief and energy diversification.
The American-Indian relationship hangs in the balance today. What was earlier celebrated as a natural alliance of two democracies has now become bogged down in strategic mistrust, trade tensions, and competing global alignments. If not saved immediately, the tariff war would not just hurt trade flows but also stray away from the grand Indo-Pacific vision where both countries had staked a shared interest.
The Author ia a Research Fellow at Quaid e Azam University, Islamabad.
