Tariff trap: Trump targets India to pressure Putin - But US may pay the price

Time of India

4 days ago

Trump's advisors insist the tariff decision is about enforcing pressure on Putin.
US President Donald Trump on Wednesday signed an executive order slapping an additional 25% tariff on Indian goods in retaliation for New Delhi's continued purchase of Russian oil.
The move doubles existing tariffs, raising India's total levy to 50%, and marks Trump's latest pressure tactic to force Russian President
Vladimir Putin
to end the war in Ukraine.
But while the tariffs are meant to cripple Russia's oil revenues, analysts warn the biggest blow may land closer to home - on US consumers, businesses, and inflation.
'The punishment for those countries that continue to take big volumes of Russian energy… would also hurt the United States' economy in a material way,' Clayton Seigle, senior fellow at the Center for Strategic and International Studies, told CNN.
TL;DR: In short, Trump's tariff blitz could
Complicate anti-inflation efforts in the US
Undermine global oil market stability
Alienate a key democratic ally in Asia
Increase prices for US consumers
Erode America's diplomatic leverage with both Russia and China
For a strategy meant to isolate Moscow, it may instead isolate Washington - from its allies, supply chains, and the global economic consensus.
Why it matters
Trump's tariff strategy is not just a foreign policy maneuver - it's a high-stakes economic gamble that could hurt American wallets and businesses while destabilizing key alliances.
The decision to punish India - a vital US trade partner and a strategic counterweight to China in the Indo-Pacific - risks undermining years of diplomatic and economic engagement. India was the ninth-largest trading partner for the US in 2024, exporting over $86 billion worth of goods and services. Tariffs at 50% could wipe out billions in annual trade and fracture a relationship Washington has long cultivated to counterbalance China.
Back home, the US economy is vulnerable. Many of the Indian exports targeted by the tariff - including textiles, auto parts, electronics components, and chemicals - are inputs for American industries or consumer staples. Raising costs on these items doesn't just squeeze margins for US businesses - it raises prices for everyday Americans, especially amid stubborn inflation and rising borrowing costs.
'The prospective tariffs would lead to more inflation in the US,' warned Seigle of CSIS. 'They would saddle American businesses with higher import costs.'
And then there's the energy domino effect. India's massive purchases of Russian oil - which Trump seeks to curb - have helped keep global prices relatively stable. Forcing India to pivot away too quickly could reduce global supply, driving up oil prices at the pump. That could reverse recent gains in curbing inflation - and create a political problem for Trump ahead of the 2026 midterms.
There's also risk to America's credibility. Targeting India for buying Russian oil while overlooking larger importers like China - or US allies in Europe - opens the US to charges of hypocrisy and selective enforcement. That undermines global trust in US trade policy, particularly among developing nations.
It is extremely unfortunate that the US chose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest. We reiterate that these actions are unfair, unjustified and unreasonable. India will take all actions necessary to protect its national interests.
MEA spokesperson Randhir Jaiswal
The big picture: India in Trump's crosshairs
India is now the second-largest buyer of Russian oil after China.
Following Russia's full-scale invasion of Ukraine in 2022, Western sanctions prompted Moscow to sell its crude at a discount. India jumped in, increasing Russian oil's share from under 2% to over 35% of its total imports by 2024. The US, meanwhile, continued importing Russian uranium, palladium, and other critical goods for its energy and defense sectors.
'It is revealing that the very nations criticizing India are themselves indulging in trade with Russia,' the MEA said onMonday.
'It is unjustified to single out India.'
India also insists that its purchases of discounted Russian oil helped keep global crude prices stable - preventing surges to $120-$130 per barrel.
Trump's anger isn't just about trade or oil - it's personal. Frustrated with Putin's refusal to negotiate peace, Trump is now turning that anger toward countries still buying Russian crude. India, despite being a US strategic partner, has become an outlet for that frustration.
'If Putin were not ignoring Trump's calls… Trump likely wouldn't be going after India so hard,' tweeted Michael Kugelman of the Wilson Center.
But there's a strategic angle too. Trump wants India to buy more - and pricier - American oil instead.
In 2021, before the Ukraine war, India was the top destination for US crude exports. Now, Trump seems determined to reverse India's pivot to Russian energy and bring it back into America's economic fold - with tariffs as leverage.
Backlash at home
For Trump, the backlash may also come from within. If tariffs drive up prices in the run-up to an election year, consumer sentiment could sour quickly. 'The US consumer would get upset with that,' UBS analyst Giovanni Staunovo said plainly.
Meanwhile, American companies are already warning of lost competitiveness. EEPC India, representing engineering exporters, estimates that US-bound Indian exports could drop by $4–5 billion.
That supply gap won't vanish-it'll be filled by cheaper competitors like Vietnam, Bangladesh, or China.
Even US military contractors are watching nervously. Beijing, in a parallel pressure campaign, has throttled critical minerals needed for defense systems. 'More than 80,000 parts used in Defense Department weapons systems rely on Chinese-controlled minerals,' reported the Wall Street Journal. The US can't afford to be squeezed from both sides-yet that's exactly what this dual-front strategy risks.
'Russia is too big to fail'
At the core of Trump's strategy is the belief that choking off Russian oil exports-especially via pressure on third-party buyers-will starve Putin's war chest. The logic sounds clean. The reality is messy.
'Russia is too big to fail,' Giovanni Staunovo, commodity analyst at UBS, told CNN. 'Russia exports 7 million barrels per day of crude and refined products. These are massive amounts that you cannot so easily replace.'
According to Vortexa, Russia now provides 13.5% of China's crude imports and 36% of India's. And while China might be too powerful to punish outright-given its control over critical minerals and defense supply chains-India, it seems, is the more convenient target.
But squeezing Russian oil off the market means driving up global prices. That affects the US, which still imports significant volumes of crude. 'Despite being a massive oil producer, the US is not immune to global price shocks,' said Kieran Tompkins of Capital Economics.
If Brent crude spikes, American gas prices will follow.
Geopolitics in a pressure cooker
This isn't just an economic story-it's a geopolitical flashpoint. Trade talks with India have stalled. The Biden-era goodwill, carefully rebuilt, is evaporating. The Modi government, previously aligned with Trump, now finds itself economically threatened.
Meanwhile, the US also faces a precarious balancing act with China.
Even as Trump pressures Beijing with tariff threats and warnings of secondary sanctions, his administration continues trade truce talks. Treasury secretary Scott Bessent reportedly told Chinese officials last week that the US was serious about enforcing sanctions. But few believe Trump can afford a full-scale economic war with both China and India simultaneously.
Even within Washington, there's skepticism.
'Draconian levels… will just be perceived as a bluff-because they'll hurt (the US), just like they'll hurt the other guys,' Seigle told CNN, arguing that more moderate tariffs between 10% and 30% 'would carry more weight' diplomatically.
India's economy may take a hit
For India, the stakes are equally high. The 50% tariff puts it at a competitive disadvantage compared to Vietnam, Bangladesh, and Pakistan, who face US tariffs of 15%-30%. Indian exports - particularly in textiles, leather, chemicals, and seafood - risk being priced out of the American market.
'Post this order, bilateral tariffs will rise to 50%, which would be the highest applied from August onwards,' said Gaura Sen Gupta, economist at IDFC First Bank. 'This definitely increases the downside risk to 2025-26 GDP estimates.'
'If the tariffs persist till March 2026, the total downside risk is estimated at 0.3% to 0.4%,' she added.
Sakshi Gupta at HDFC Bank warned that without a breakthrough in negotiations, India may have to lower its FY26 growth forecast below 6%, citing a potential 40-50 basis point hit to GDP.
What's next:
* A US delegation is expected in Delhi later this month for fresh talks.
* India may offer to gradually reduce Russian oil imports if the US offers price parity and energy security.
* The Indian government is reportedly considering relaxing dairy access and boosting US defense imports to revive talks.
Meanwhile, India is bracing for impact. The commerce ministry is exploring ways to support affected exporters - from easing loan norms to cutting compliance costs. But subsidies are off the table.
The real test may come in US domestic politics. If consumer prices climb and business leaders balk, Trump may be forced to recalibrate - again.
Mark Linscott, former US trade representative, said that without a direct Modi-Trump channel, 'we are in a lose-lose.' But he still believes 'there is real potential for a win-win trade deal.'
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