India's geopolitical response to weaponisation of tariffs
This, however, does not mean that New Delhi underestimates the importance of its ties with the US or has lost hope of concluding a trade deal with Washington. Rather, it is a geopolitical response to the weaponisation of tariffs by the US. If the August 15 Trump-Putin meeting brings about a breakthrough on Ukraine, the American pressure on India over Russian oil may ease. This could also open the door to an India-US trade deal.
The European Union was the latest bloc to strike a deal with Trump, agreeing to a 15% tariff. Earlier, the UK settled at 10%, Japan at 15%, Indonesia at 19%, Vietnam at 20%, and the Philippines at 19%. The trend suggests that most agreements fall within the 15–20% range. If things move positively, India could also get included in this category.
However, many now realise that, in bilateral deals with the US, most countries end up losing. Although Beijing is also negotiating with Washington, the former has imposed its own retaliatory tariffs and export controls while continuing to buy large volumes of Russian oil. It is bargaining hard, thanks to its economic strength and clear geopolitical vision.
Others lacked such clarity, or believed that by staying friendly with Washington they could secure a favourable deal. That hope has now proved illusory. This is why Brazil's Lula is calling for a joint BRICS response to Trump's tariffs instead of individual negotiations.
India also faces a tough choice over opening its markets to US agricultural and other products. PM Modi has asserted that India will never compromise on the interests of its farmers. He knows there could be a serious domestic backlash if he is seen as weak in dealing with the US. Already, there is the shadow of Trump's claims that he brokered the easing of tensions between India and Pakistan.
Even if India secures a trade deal with the US, the geopolitical currents have started shifting elsewhere. The trans-Atlantic partnership is already in disarray. The more Trump speaks against BRICS, the more significance the grouping gains. All this comes as India prepares to assume the BRICS presidency in a few months. It will also coincide with the US's G20 presidency, where Washington plans to focus on pure economic and finance rather than the broader developmental agenda advanced during the four developing-country presidencies.
Against the backdrop of an aggressive China, India had strengthened its partnership with the US and advanced the Indo-Pacific narrative, aiming to build strong economic, technological, and military ties with Washington. The reliability of this approach is now being questioned.
China, meanwhile, wants India integrated into its economic orbit. While India-China trade has grown significantly, investment and technology ties remain minimal. As two large, fast-growing neighbours, they could sustain each other's growth for decades. China also holds many of the technologies India needs for modernisation. However, scepticism runs deep in India, with many in New Delhi doubting that Beijing will ever share investment and technology. Building even a modest level of trust will be essential to unlocking these potential linkages between the two countries. What unfolds in the coming weeks could shape India's economy and foreign policy for decades.
Gulshan Sachdeva is professor at the School of International Studies, JNU, and Chief Coordinator, Global South Centre of Excellence at RIS, New Delhi. The views expressed are personal.
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