Trump Tariffs and More: A Defining Crisis for India

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Will India Play a Long Game, A Short or a Long-Short one at what could be a defining foreign policy moment for New Delhi challenged by the US Tariffs and more.

A post on his social media platform Truth Social by President Donald J Trump of the United States on August 04 has led to another alarm in India’s foreign policy and economic circles.

Mr Trump posted, “India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits. They don’t care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!!     President DJT”

This comes after his tweet on Truth Social on Jul 30, 2025, 5:39 PM, President Trump stated, “Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!”

Important to note that there was no mention of India being a friend in the Tweet on August 04, so something appears to have changed in the last four days that has led to India transforming from a friend to just another trading partner.

Responding to these developments India’s Ministry of External Affairs in a Statement by Official Spokesperson on August 04, 2025 explained the unfair targeting of India, “by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict. In fact, India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict. The United States at that time actively encouraged such imports by India for strengthening global energy markets stability”.

The Ministry Statement then went on to outline the necessity for providing, “predictable and affordable energy costs to the Indian consumer,” and also launched a broadside on the European Union and the US for continuing to trade with Russia while branding India as  violator.

The Statement quoted that, “European Union in 2024 had a bilateral trade of Euro 67.5 billion in goods with Russia. In addition, it had trade in services estimated at Euro 17.2 billion in 2023’.

In comparison the Ministry stated, “This is significantly more than India’s total trade with Russia that year or subsequently. European imports of LNG in 2024, in fact, reached a record 16.5mn tonnes, surpassing the last record of 15.21mn tonnes in 2022,” and highlighted that Europe-Russia trade includes not just energy, but also fertilizers, mining products, chemicals, iron and steel and machinery and transport equipment.

On the United States the Ministry said, “Where the United States is concerned, it continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilizers as well as chemicals”.

India’s aggressive stance is not surprising given that in the past few weeks, New Delhi has been directly confronting the claims by US President and his staff of Mr Trump having mediated a cease fire between India and Pakistan.

Some of the Indian antagonism is also aimed at assuaging the domestic political audience where the NDA government is facing a difficult parliamentary session as the opposition INDIA alliance is raising several issues one of which is India bending before the Trump administration’s call for a cease fire in the recent skirmish against Pakistan known as Operation Sindoor.

Indeed in some ways this has been a shock to the Indian establishment – foreign policy and trade given that New Delhi was expecting a favourable tariff agreement with the United States. However, it is apparent that Indian officials failed to read the writing on the wall and the underlying motivations of the tariffs that Mr Trump was to impose.

The US President highlighted these in his executive order of July 31 explaining these as a national emergency option for the US.

The conditions for a favourable tariff win for a country were seen as, “continued reciprocity in bilateral trade relationships, impact of foreign trading partners’ disparate tariff rates and non-tariff barriers on U.S. exports, the domestic manufacturing base, critical supply chains, and the defense industrial base. 

Indicating the he had received “additional information and recommendations on foreign relations, economic, and national security matters, including the status of trade negotiations, efforts to retaliate against the United States for its actions to address the emergency declared in Executive Order 14257, and efforts to align with the United States on economic and national security matters,” the tariffs were to be determined by these factors as well.

He highlighted that, “some trading partners have agreed to, or are on the verge of agreeing to, meaningful trade and security commitments with the United States, thus signaling their sincere intentions to permanently remedy the trade barriers that have contributed to the national emergency declared in Executive Order 14257, and to align with the United States on economic and national security matters”.

And possibly coming to countries as India, he indicated, “Other trading partners, despite having engaged in negotiations, have offered terms that, in my judgment, do not sufficiently address imbalances in our trading relationship or have failed to align sufficiently with the United States on economic and national-security matters”. 

Another category was, “some trading partners that have failed to engage in negotiations with the United States or to take adequate steps to align sufficiently with the United States on economic and national security matters”.

India obviously falls in the latter two categories – mainly did not offer terms removing imbalances in the trading relationship with the US as well as the economic and national security interests of America.

While the first observation is due to Indian officials refusing to compromise on some of the basic concerns related to domestic economic mainly agriculture and dairy the second observation applies to Indias’ proximate relations with Russia on the energy and military partnership.

Clearly President Trump has thrown the gauntlet as a belief that the deep understanding and what Mr Trump called friendship between him and Indian Prime Minister Narendra Modi and the strategic necessity for New Delhi being a bulwark against a rising China in the Indo Pacific has been questioned.

Despite the vacillations seen in Mr Trump’s decision making, this is possibly a 1991 moment for India which underlines the need for sustaining sovereign decision making against what some have identified as ‘bullying’ by the US of a close strategic partner.

The answer is not another swing in the pendulum towards Russia as some have suggested but a decision based not just on national security interests but economic wellbeing of the vast majority of Indians who will be impacted by a row with the largest economy of the World the United States.

While, “Swadeshi” should be the way ahead, compromises not with the United States but others including China and Pakistan will have to be made and more importantly building a domestic political consensus.

Is New Delhi ready for such a move or once again attempt to grovel before Washington offering to buy military equipment as Javelin or Stryker which are on offer but are either too expensive or outdated.