Why the India–U.S. Trade War Isn't A Lover's Spat — And Why History Says America Will Blink First, Leaving Trump's Successor To Pay A Bigger Price To Woo New Delhi
The tariffs target some of India's most valuable export sectors to the U.S., including textiles, gems and jewellery (worth about US $8.5 billion in 2024), and auto parts, while sparing pharmaceuticals (US $8 billion), smartphones and electronics (US $14.4 billion), and energy goods. Seafood (US $2 billion) and machinery (US $7.1 billion) are also key exports. In total, India sold US $87.3 billion worth of goods to the U.S. in 2024, against imports of US $41.5 billion from America—leaving the U.S. with a US $45.8 billion goods trade deficit.
The United States has avoided applying similar tariffs on India's service exports—such as IT outsourcing, software, consulting, and back-office work—because these are governed by different WTO rules and directly benefit American companies by lowering operational costs.
However, high goods tariffs risk serious geopolitical fallout. India is a critical partner in the Indo-Pacific strategy, central to balancing China's rise. Harsh trade measures could weaken trust, disrupt defence and intelligence cooperation, and strain the Quad alliance (U.S., India, Japan, Australia). They also risk pushing India toward deeper economic and security ties with Russia and China, reducing America's leverage in Asia.
This is not the first time U.S.–India relations have been tested. In 1998, India's Pokhran-II nuclear tests triggered U.S. sanctions under the Glenn Amendment, including aid bans, technology export restrictions, and blocked loans. Those tensions eased only after strategic talks in 1999–2000, paving the way for the landmark 2005–2008 civil nuclear deal, when Washington bent its non-proliferation rules to allow nuclear cooperation with a non-NPT state. That deal was a major concession, aimed at drawing India closer as a democratic counterweight to China.
Today, with trade disputes replacing nuclear concerns, Washington faces a similar choice: punish New Delhi for policies it opposes, or preserve a long-term partnership built over decades. The risk is clear—short-term economic retaliation could cost the U.S. long-term strategic influence in one of the world's most important bilateral relationships.
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