Trump tariffs: President Donald Trump’s decision to impose 50% tariff on all Indian exports to the United States is the sharpest escalation in US-India trade tensions in decades. Announced as punishment for India’s continued import of Russian oil, the move threatens to derail $86.5 billion worth of Indian exports annually, from textiles and pharmaceuticals to machinery. While Beijing faces a lower 30% duty and even retaliates with a 10% tariff, India finds itself targeted with tariffs nearly twice as steep — despite being promoted by successive US administrations as a democratic counterweight to China in Asia.
The timing, scale, and stated justification of these tariffs reek of political opportunism rather than strategic rationale. But if New Delhi reacts with indignation and haste, it will only make a bad situation worse. India must now engage in a carefully calibrated response — measured, firm, and rooted in long-term strategic interests.
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A disproportionate blow
That Washington has chosen to penalise India more harshly than China — despite the latter’s significantly higher import of Russian oil — is indefensible. In 2024, China purchased $62.6 billion worth of Russian oil, compared with India’s $52.7 billion. Yet the White House has spared Beijing from similar punitive measures, likely deterred by China’s monopoly over critical minerals such as gallium, germanium, and rare earths — materials indispensable to US defence and clean energy industries.
Further, US allies like the European Union imported $39.1 billion in goods from Russia last year, including $25.2 billion in oil. Even the US itself quietly purchased $3.3 billion worth of strategic materials from Moscow. The optics are clear: India is being penalised not for violating a global norm, but for being a convenient target.
This asymmetric treatment undermines the very foundation of trust in US-India relations. It mocks the spirit of the “comprehensive global strategic partnership” and sends a chilling message to Indian businesses—particularly those that recently pivoted to the US market following the American push to de-risk supply chains from China.
Strategic restraint, not tit-for-tat
There will be understandable calls within India to retaliate in kind, perhaps by raising tariffs on American goods, delaying defence contracts, or restricting US tech firms. Such impulses must be resisted. India’s economic interests are best served not by reciprocal punishment, but by strategic restraint.
Any retaliatory action will likely be counterproductive. First, it risks further escalation with a volatile White House that has repeatedly demonstrated a willingness to disrupt global trade norms. Second, it could alienate powerful allies in Washington, including members of Congress and US businesses who continue to view India as a critical partner.
Instead, India must use this moment to strengthen its case on multiple global platforms — the World Trade Organisation, the G20, and bilateral dialogues with other affected nations. The goal should be to isolate the US diplomatically for its unilateralism, not isolate India through a trade war.
Defending energy security, not apologising for it
India’s oil purchases from Russia are guided by the imperatives of energy security, not geopolitical defiance. With 1.4 billion people and a growing industrial base, India must ensure affordable and stable energy supplies. The US itself acknowledged this when, in 2022, it helped create a G7-led price cap that allowed Russian oil purchases below $60 per barrel.
That same price cap is now being used against India. Yet oil prices have fallen, and Russian crude is being traded through complex mechanisms that circumvent Western enforcement. India is neither violating sanctions nor subsidising war; it is merely acting in its national interest, as any sovereign country would.
To abandon Russian oil under US pressure would be not only economically unsound, but strategically foolish. It would signal to future US administrations that coercive tariffs are an effective tool to bend Indian policy—encouraging more of the same.
Turning crisis into opportunity
The immediate economic impact of a 50% tariff could be severe. Analysts estimate a 40–50% drop in Indian exports to the US, particularly in labour-intensive sectors like garments, gems, and machinery. Small and medium exporters, already under pressure from rising freight costs and global demand slowdown, will be the worst hit.
Yet this disruption could also be an opportunity to diversify. India must accelerate trade outreach to regions such as the European Union, Latin America, Africa, and ASEAN, where protectionism is less arbitrary and market access more stable. The recently signed India-EFTA trade pact is a good model for what future agreements should look like: comprehensive, mutually beneficial, and devoid of political conditionalities.
At the same time, India must deepen its economic engagement with Russia, Central Asia, and the Global South, sending a clear signal that economic coercion from the West will not push it into isolation. The recent expansion of BRICS and growing use of alternative payment systems can further cushion the blow from US overreach.
Rethinking strategic alignment
The Trump administration’s tariff gambit is a wake-up call for India’s foreign policy establishment. For too long, New Delhi has indulged in strategic ambiguity — seeking closer defence and economic ties with the US while preserving long-standing partnerships with Russia and other non-Western actors.
The illusion that India can be a permanent pillar of the US-led Indo-Pacific while maintaining an independent foreign policy has now been shattered. Washington’s trust is conditional, its partnership transactional.
India must now chart a more autonomous path — balancing its relations not just between East and West, but among a constellation of emerging power centres. The shift should not be anti-American, but post-American: less reliant on Washington’s goodwill, more rooted in India’s global economic weight and regional influence.
Policy prescription for the medium term
India’s best response lies in economic and diplomatic statecraft, not populist rhetoric. First, a formal complaint must be filed at the WTO against the 50% tariff. While the body may be paralysed, the move signals India’s commitment to rules-based trade.
Second, India must engage with American businesses — especially importers of Indian goods—to create domestic pressure within the U.S. against the tariffs. Sectors like pharmaceuticals, where Indian imports are vital, can be important allies.
Third, India must quietly but firmly convey that defence and technology cooperation cannot be delinked from economic stability. If the U.S. seeks a reliable partner in the Indo-Pacific, it must treat India with consistency and respect.
Fourth, India should propose a 6-month moratorium on retaliatory actions while seeking structured talks with the U.S. Trade Representative. During this window, it must prepare alternative export markets and incentivise domestic consumption for sectors hit hardest by the tariffs.
India faces a test—not just of economic resilience, but of strategic maturity. Tariffs may disrupt trade flows, but they cannot determine national choices. The path ahead must be paved not with confrontation, but with clarity. A stronger, self-confident India should respond to tariff coercion not with anger, but with ambition—seizing this setback to reimagine its place in a more multipolar, less forgiving world.