Trump's Tariffs Shock India, With New Delhi Weighing Its Options

Newsweek

7 hours ago

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A decades-long partnership between the United States and India has come under sudden strain, as President Donald Trump's new wave of tariffs on Indian exports left officials in New Delhi caught off guard and scrambling for answers.
Trump's decision to impose a 25 percent duty on Indian goods earlier this month—with plans to double it to 50 percent next week over India's continued purchases of Russian oil—landed with little warning and no clear path forward. It marked a stunning public rupture between two countries that have for years portrayed themselves as close strategic partners in the Indo-Pacific and beyond.
"This is the worst downturn since 2013 or 2014," Shajak Sengupta, a senior research associate at Columbia University's Center on Global Energy Policy, told Newsweek. "What makes it more serious is how public and high-level the criticism has been. This didn't come through backchannels—it came straight from the president."
Sengupta cited multiple tensions behind the rift beyond Russian oil, including India's rejection of Trump's claims to have mediated a cease-fire with Pakistan, stalled trade talks on agriculture, and a broader desire to pressure Moscow.
US President Donald Trump and Indian Prime Minister Narendra Modi hold a joint press conference in the East Room of the White House in Washington, DC, on February 13, 2025.
US President Donald Trump and Indian Prime Minister Narendra Modi hold a joint press conference in the East Room of the White House in Washington, DC, on February 13, 2025.
Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images
"But when all of those issues get bundled into tariffs, with no signaling beforehand, that's when it becomes a structural problem," he said.
Modi's Bet on Trump Falters
Just months before the tariff shock, Indian Prime Minister Narendra Modi stood shoulder to shoulder with President Trump in Washington, declaring a new phase in the U.S.-India strategic relationship. "We're going to open up India like never before," Trump said during a joint press appearance at the White House, where he announced a target of expanding bilateral trade to $500 billion by 2030.
Modi, in turn, called the U.S. "India's most trusted partner" and said he expected the "big deal" to be finalized "within months."
"In the language of America, it's 'Make India Great Again' — MIGA," Modi said as Trump smiled along. "When America and India work together, this MAGA plus MIGA becomes a 'mega partnership for prosperity."
Their February meeting was cast as a breakthrough moment: both leaders praised each other's vision, committed to deepening defense and economic cooperation, and previewed a bilateral trade agreement that was, by all public accounts, nearing completion.
WASHINGTON, DC - FEBRUARY 13: U.S. President Donald Trump and Indian Prime Minister Narendra Modi meet in the Oval Office at the White House on February 13, 2025 in Washington, DC.
WASHINGTON, DC - FEBRUARY 13: U.S. President Donald Trump and Indian Prime Minister Narendra Modi meet in the Oval Office at the White House on February 13, 2025 in Washington, DC.That optimism has since collapsed under the weight of Trump's August tariff orders, with the South Asian giant facing a penalty higher than that imposed on China, long cast as America's chief economic rival.
"It's a lesson in the limits of chemistry," said Chietigj Bajpaee, senior research fellow for South Asia in the Asia-Pacific Programme at Chatham House.
That breakdown in personal diplomacy has quickly translated into real economic costs. The new tariffs, now among the steepest levied by the U.S. on any trading partner, strike directly at sectors central to India's export economy such as textiles and leather goods, which together accounted for $18.3 billion of exports to the U.S. in 2024.
"With Trump, everything is leverage," Bajpaee said. "What seemed like alignment in February turned out to be a setup for pressure in August."
Trade Fallout Spills Into Strategy
What began as a trade dispute has quickly widened into a broader geopolitical reckoning. Indian officials are said to be furious at what they view as scapegoating by Washington.
"It is extremely unfortunate that the U.S. should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest," the Indian Ministry of External Affairs said in a statement. "We reiterate that these actions are unfair, unjustified and unreasonable."
The fallout comes at a time of renewed alignment among BRICS nations—Brazil, Russia, India, China, and South Africa—all of whom are facing pressure from Washington on various fronts. Modi is expected to meet Russian President Vladimir Putin later this year, following a planned BRICS summit in China that Modi will attend.
Indian Prime Minister Narendra Modi, left, Russian President Vladimir Putin, center, and Chinese President Xi Jinping, right, at a BRICS summit, on October 23, 2024, in Kazan, Russia. Russia hopes to revive a three-way bloc...
Indian Prime Minister Narendra Modi, left, Russian President Vladimir Putin, center, and Chinese President Xi Jinping, right, at a BRICS summit, on October 23, 2024, in Kazan, Russia. Russia hopes to revive a three-way bloc with India and China."This has renewed the convergence of interests between India, Russia and China," Bajpaee said. "But India still seeks to project a benign worldview—non-Western, but not anti-Western. And the long-term rationale for working with the U.S. hasn't changed."
Inside the White House, however, officials have sharpened their tone. "India portrays itself as being one of our closest friends in the world, but they don't accept our products. They impose massive tariffs on us," said Stephen Miller, deputy chief of staff, in a Fox News interview.
"They're taking advantage of us on trade and underwriting Putin's war effort."
Stephen Miller: "India portrays itself as being one of our closest friends in the world; but they don't accept our products, they impose massive tariffs on us, we also know they engage in a lot of cheating on immigration policy." pic.twitter.com/IwWsDH3jr3 — captive dreamer (@avaricum777) August 4, 2025
Treasury Secretary Scott Bessent added fuel to that fire on CNBC Tuesday, accusing New Delhi of "profiteering" from the war by purchasing Russian oil at a steep discount, refining it, and selling it back on the open market while pocketing the profit.
"This opportunistic arbitrage is unacceptable," the former hedge-fund manager said.
The strategic cost of the rift could be significant. "India shares America's view that China poses the world's most significant strategic threat," Richard Rossow, a senior adviser at the Center for Strategic and International Studies, told Newsweek. "A strong trade agreement would accelerate this growing partnership and bolster military cooperation—both bilaterally and through forums like the Quad," an informal diplomatic working group made up of Australia, India, Japan, and the United States and designed to counter China's influence in the Indo-Pacific.
Alyssa Ayres, a former senior State Department official and now a professor at George Washington University, told Newsweek the downturn signals a shift in the president's focus during his second term. "In Trump's first term, he emphasized India's market access issues, but also worked to deepen the broader relationship," she said. "Now it looks like trade concerns are crowding everything else out."
What Comes Next?
Despite the tensions, both sides have reason to tread carefully. India remains the United States' ninth‑largest trading partner, while the U.S. is India's top export destination, importing over $86 billion in goods last year.
"India is one of our ten largest goods‑trading partners and a key supplier of offshore IT‑enabled services," said Rossow. "And to India, the U.S. is easily the most significant economic partner—the largest destination for its goods and services exports, and the largest source of inbound foreign investment."
Calls for diplomacy have grown louder. "The U.S. and Indian governments need to talk to each other in private and resolve their differences," Ambassador Atul Keshap, president of the U.S.–India Business Council, told Newsweek.
"Washington and Delhi have proven they can have difficult conversations that address problems and keep 25 years of partnership on track. Business needs predictability and clear signals of continued technology and supply chain collaboration. Substantial investments in both directions create jobs and shared prosperity in both America and India—and are worth sustaining."
Sengupta warned the standoff may already be taking a toll, with tariffs and uncertainty already slowing investment and economic activity in both countries. Indian firms have invested more than $40 billion in the U.S., supporting nearly 425,000 American jobs—a sharp increase from $22 billion and 125,000 jobs in 2020, according to industry data.
"If ties continue to sour, you could see a plateauing or even decline in trade and investment—the kind of flows needed not just to fuel India's development, but also the U.S. strategy to reduce dependence on China."
Former U.N. Ambassador Nikki Haley reinforced the warning in a Newsweek opinion column published Wednesday, urging the administration not to lose sight of the larger picture.
"Scuttling 25 years of momentum with the only country that can serve as a counterweight to Chinese dominance in Asia would be a strategic disaster," she wrote. Haley called for direct talks between Trump and Modi and said India should be treated "like the prized free and democratic partner that it is—not an adversary like China."