U.S. tariffs on India and the new trajectory of Indo-U.S. relations

India and the United States have long been seen as natural partners in shaping the global order, with their relationship often described as one of the most important bilateral ties of the 21st century. Built on shared democratic values, expanding economic cooperation, and converging security interests, the partnership has steadily deepened over the past two decades. Yet, like any relationship between two large and independent powers, it has also faced moments of tension, competition, and recalibration.

Today, Indo-U.S. relations are once again at a turning point. A combination of diplomatic disagreements, trade disputes, and shifting geopolitical alignments is testing the resilience of the partnership. From Washington’s imposition of steep tariffs on Indian exports to New Delhi’s defiance over Russian oil imports, and from questions over U.S. commitment to the Quad to India’s renewed outreach to China and Russia, the landscape is becoming increasingly complex.

The current turbulence raises critical questions: Can India and the United States balance their differences while preserving the strategic convergence that has brought them closer over the past two decades? Or are the recent disputes a sign of a deeper rift that could reshape regional dynamics in Asia?

Diplomatic tension: A Nobel Peace Prize and a standoff on mediation

The first spark of recent strain came not from tariffs but from Trump’s personal diplomacy. According to a report in The New York Times, during a phone call with Prime Minister Modi on June 17, Trump sought India’s support for his Nobel Peace Prize nomination. The U.S. president reportedly claimed credit for halting hostilities between India and Pakistan in May and told Modi that Pakistan was already planning to nominate him for the prestigious award.

“The not-so-subtle implication,” one Indian official familiar with the call said, “was that Modi should do the same.”
But Modi was quick to push back. Stressing India’s long-held policy, he reminded Trump that New Delhi had not accepted third-party mediation in the India-Pakistan conflict. He insisted the recent ceasefire was “settled directly” between the two countries, not brokered from abroad.

The White House never confirmed the details of the conversation, but Trump has repeatedly claimed public credit for stopping the escalation. In one of his social media posts, he lamented:

“I won’t get a Nobel Peace Prize for stopping the war between India and Pakistan. No, I won’t get a Nobel Peace Prize no matter what I do.”

For New Delhi, Trump’s insistence on a role in India-Pakistan diplomacy was more than a symbolic overreach. It struck at the heart of India’s sovereignty, reviving memories of past American interventions—from President Bill Clinton’s pressure during the 1999 Kargil conflict to quiet U.S. efforts after the 2019 Pulwama terror attack.

Diplomatic observers noted that Prime Minister Modi’s decision to dismiss the Nobel Prize request was not merely a personal rejection, but a clear message that India intends to maintain its independent approach to regional security and avoid aligning with U.S.-driven narratives on South Asia.

Trade friction: The 50% tariff blow

The political chill soon spilled over into economics. In July, Trump imposed a 25% tariff on Indian goods, citing trade imbalances and stalled negotiations over market access. Weeks later, after New Delhi refused to halt purchases of discounted Russian crude oil, the White House doubled down with another 25% punitive tariff—bringing the total levy to a staggering 50%.

The measures, effective since early September, place India among the hardest-hit countries in Trump’s global tariff crusade, alongside Brazil. Indian exports worth over $87 billion annually are directly affected, particularly textiles, gems, jewelry, and seafood—sectors heavily dependent on the American market.

The impact has been swift. Textile hubs in Tirupur, Surat, and Delhi have reported production halts due to shrinking order books. The Federation of Indian Export Organisations (FIEO) warned that Indian goods had become “uncompetitive compared to competitors from Vietnam, Cambodia, and China.”

Stock markets reflected the anxiety. The BSE Sensex fell 849 points the day before tariffs came into force. Goldman Sachs projected that sustained levies could shave India’s GDP growth below 6%, down from the forecast 6.5%.

Indian officials have responded with defiance. External Affairs Minister S. Jaishankar denounced U.S. demands to halt Russian oil imports as “unjustified and unreasonable,” pointing to Europe’s far greater dependence on Russian energy. Modi, in a national address, urged citizens to embrace the “Made in India” mantra:

 “Pressure on us may increase [from tariffs], but we will bear it. All of us should follow the mantra of buying only Indian goods.”

Despite the rhetoric, many in New Delhi acknowledge the economic pain is real—and that Washington’s move has strained trust in the bilateral relationship more than any previous trade dispute.

Geopolitical realignment: Modi, Xi, and Putin

As trade tensions with Washington escalate, Prime Minister Modi has signaled a shift—or at least a strategic opening—towards other global powers. His visit to China in September for the Shanghai Cooperation Organisation (SCO) summit marked his first since the deadly Galwan Valley clash in 2020, which brought India-China relations to a virtual standstill.

In Tianjin, Modi shared the stage with Chinese President Xi Jinping and Russian President Vladimir Putin. A photograph of the three leaders together dominated headlines across Asia and, according to diplomats, irritated Trump, who sees both Russia and China as strategic competitors.

During a 50-minute bilateral with Xi, Modi invited him to India for the 2026 BRICS summit. Xi responded warmly, declaring that “the Dragon and the Elephant should work together.”

Though deep mistrust remains between India and China—particularly on border disputes and water-sharing—both leaders agreed to soften rhetoric and explore incremental confidence-building steps.

With Russia, ties have been more straightforward. Jaishankar’s recent Moscow trip underscored India’s continued reliance on Russian energy and defense supplies. Putin is expected in New Delhi later this year, underscoring the durability of what both countries still call an “all-weather friendship.”

Analysts caution that India is unlikely to fully embrace China, but economic realities and geopolitical pressures are pushing New Delhi to hedge more visibly. “India will tiptoe toward China, but not in a full embrace,” one Indian official said. “With Russia, the comfort is greater. But both relationships are a signal to Washington that India has options.”

Trump expressed his concern over shifting global alliances on Friday following the SCO summit in Tianjin. Writing on his Truth Social account, Trump posted the photograph of Modi, Putin, and Xi side by side, adding: "Looks like we’ve lost India and Russia to deepest, darkest, China. May they have a long and prosperous future together!"

Quad uncertainty: Trump’s no-show?

Against this backdrop, the fate of the Quad—the four-nation grouping of the U.S., India, Japan, and Australia—has become another litmus test for Indo-U.S. ties.

India is scheduled to host the Quad Leaders’ Summit in November. Modi had announced earlier this year that Trump had accepted his invitation. But the New York Times reported Trump may drop plans to attend, citing his frustration with India’s outreach to Russia and China.

His cryptic remark—“We’ve lost India (and Russia) to deepest, darkest China”—has fueled speculation about Washington’s wavering commitment to the Indo-Pacific grouping, which has always been framed as a counterweight to Beijing’s influence.

The prospect of Trump’s absence has unsettled policymakers in Tokyo and Canberra, where faith in Washington’s reliability has already been tested by its erratic trade and defense decisions.

In New Delhi, Modi struck a conciliatory tone, insisting ties with Washington remain “very positive.” On social media, he wrote:

 “Deeply appreciate and fully reciprocate President Trump’s sentiments and positive assessment of our ties. India and the United States share a very positive and forward-looking comprehensive and global strategic partnership.”
For his part, Trump later reassured reporters: “I will always be friends with Modi. India and the United States have a special relationship. There is nothing to worry about.”

Still, doubts linger. Without a visible U.S. presence at the Quad summit, the grouping risks losing momentum at a time when China is strengthening its own partnerships across Asia.

For decades, India and the U.S. have built their relationship on shared democratic values, defense cooperation, and mutual concern over China’s rise. Defense deals, technology transfers, and people-to-people ties have deepened significantly since the early 2000s. But the latest turbulence suggests that strategic alignment has limits when domestic politics, sovereignty sensitivities, and divergent energy needs collide.

“Trump has blown it,” one senior Indian trade official lamented. “The hard work between the two countries, which inherently did not trust each other but still managed to build a solid strategic relationship, is now at risk.”

Veteran South Asia analyst Michael Kugelman was more blunt: “The current administration may set a record for the highest number of own goals with a top bilateral partner over such a short period of time.”

At the same time, Indian officials acknowledge that the relationship is too important to abandon. Trade talks continue quietly. Defense cooperation has not stopped. And Modi, despite frustrations, has avoided openly antagonizing Washington.

The challenge, analysts say, is that both countries must navigate a period of mistrust while balancing their broader strategic calculations. For India, that means buying time with Russia and stabilizing ties with China without alienating the U.S. For Washington, it means managing Trump’s transactional instincts with the long-term reality that India remains critical to any Indo-Pacific strategy.

The trajectory of Indo-U.S. relations has rarely been linear. From Cold War estrangement to post-9/11 strategic convergence, the partnership has repeatedly adapted to shifting global dynamics. The current turbulence, though serious, may yet be another phase in that cycle.

But the stakes are higher than before. With tariffs biting into trade, tensions over Russia complicating diplomacy, and the Quad’s credibility at risk, both sides face hard choices.

Whether Trump and Modi can steady the ship will depend not only on their personal rapport but also on their ability to look beyond short-term disputes to the structural imperatives—geopolitical balance, economic growth, and democratic solidarity—that bind their nations.

For now, the world watches as two of the world’s largest democracies test the limits of their partnership in an era of great power competition.