Trump's Trade War Isn't About Policy—It's About Power
It was supposed to be a trade deal between the world's most powerful nation and the fourth-largest economy by gross domestic product (GDP). But there's now a possibility that it may turn into a source of serious geopolitical tension—with Brazil, Russia, India, and China bundled on one side.
If that happens, President Donald Trump cannot evade responsibility for causing the greatest harm to the India–US strategic partnership—which had evolved over the last two decades—merely to satisfy his ego. While the US's resistance to Russia and China is strategic and understandable, the disputes with India and Brazil are purely a result of an arrogant display of power, disregarding the interests of friendly nations.
The US President wants to be known as a global peace broker. Delhi has no objection to that. But Prime Minister Narendra Modi denied him the pleasure of interfering in India's recent actions against Pakistan.
To begin with, India's trade negotiation team had little clue about the US decision to impose a 25 per cent (reciprocal) tariff plus a 10 per cent penalty—on merchandise trade—for buying Russian arms and oil. The penalty component was not even on the table as recently as last week.
Delhi has recently entered into a path-breaking Comprehensive Economic and Trade Agreement with the UK, under which India opened 89.5 per cent of its tariff lines, covering 91 per cent of UK exports. India has agreed to reduce import duties substantially on key British interests such as automobiles, Scotch whisky, cosmetics, medical devices, silver, etc. This transition will occur in a phased manner.
Delhi had offered a similar, if not better, set of concessions to the USA but refused to open the market to genetically modified (GM) food, dairy, and a few other agricultural products. India has strict policies on these items, and even countries like New Zealand were denied market access for dairy. A separate negotiation was underway regarding the reduction of non-tariff barriers (NTBs).
Indian sources say US trade negotiators were 'satisfied" with India's proposals, and the draft agreement had been awaiting the President's approval for over a week. The general consensus in Delhi was that Trump would eventually seek personal credit for 'forcing' India to open its markets.
On July 20, US Commerce Secretary Howard Lutnick told an American TV channel that the August 1 deadline for new tariffs was sacrosanct. If countries failed to reach trade deals by then, the previously announced reciprocal tariffs would take effect—though trade negotiations could still continue. 'Nothing stops countries from talking to us after August 1," he said.
Accordingly, India completed scenario planning as early as last week to prepare for a 25 per cent US tariff until a deal was reached. The 10 per cent 'penalty" was not anticipated.
The US accounted for just over one-fifth of India's $371 billion goods exports in 2024–25. A 35 per cent tariff will inevitably affect some of that trade. Apparently, Trump is using this as leverage to pressure India. According to some sources, Trump personally requested Prime Minister Narendra Modi to credit him for stopping the India-Pakistan war—an appeal Modi declined.
Meanwhile, Modi clarified on the floor of Parliament that US Vice-President JD Vance had unsuccessfully tried to persuade him to halt Operation Sindoor against Pakistan.
'The US Vice President tried to contact me three or four times, but I was in meetings with the armed forces," PM Modi said on July 29. When he returned the call, Vance warned of a 'big attack from Pakistan," to which Modi responded that any attack on India would be met with a 'much bigger attack".
While the prime minister's statement in Parliament effectively ended the debate over US interference in India's response to Pakistan's state-sponsored terrorism, Trump, on the same day, reiterated his 'role' in preventing an India–Pakistan war and hinted at imposing a 20–25 per cent tariff on India.
On Wednesday, the US announced a deal to develop Pakistan's 'massive oil reserves". It remains unclear what reserves he was referring to. At best, the US may be aiming to gain control over some of Pakistan's mineral resources, outbidding China.
As one Indian official put it: 'We are in a peculiar situation where decisions on trade and tariffs are no longer linked to economic arguments." The submission of Japan, South Korea, and the European Union may have bolstered Trump's ego. But given India's historical defiance—like the 1998 nuclear tests—it would be unwise to underestimate its nationalist resolve. Delhi has a history of resisting foreign pressure.
What works in India's favour is that roughly 4–5 percent of its growth is domestically driven. While exports help boost growth figures, India is not as export-dependent as, say, Vietnam, which relies heavily on US markets.
In his latest outburst, Trump warned that India and Russia would 'take their dead economies down together". He claimed the US has little business interest in India. We will have to wait and see how American industry—especially giants like Apple—react to such outrageous claims.
But one thing is certain: India is in for a few difficult quarters on the export and growth front. A silver lining lies in ongoing litigation in the US challenging the legality of Trump's reciprocal tariffs. The US President invoked an emergency law to take sweeping action, bypassing Congress.
Pratim Ranjan Bose is an independent columnist. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18's views.
tags :
donald trump India-Pakistan ties pm narendra modi tariffs United states
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First Published:
July 31, 2025, 14:36 IST
News opinion Opinion | Trump's Trade War Isn't About Policy—It's About Power
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