August 16, 2025
Can India Survive the Trade War?
This article was originally published in The Diplomat.
New Delhi has been blindsided by U.S. President Donald Trump’s recent tariff temper tantrums. While Indian policymakers anticipated some trade tensions with the United States during Trump’s second term, they hoped that Prime Minister Narendra Modi’s strong rapport with Trump, along with the geostrategic importance of the India-U.S. partnership, would spare them from the worst of Washington’s protectionist impulses.
Indeed, until recently, India-U.S. trade ties seemed to be heading in a positive direction. Trump and Modi agreed to increase bilateral trade to $500 billion by 2030 during their meeting in February. Earlier this summer, India and the United States seemed on the verge of clinching a trade deal.
India has little choice but to try to soothe simmering trade tensions with the U.S. without abandoning its redlines, while carefully managing the implications of increased cooperation with China, and expanding its network of trade ties beyond the two great powers.
In a dizzying reversal, on August 7, India found itself with a 25 percent tariff on most products it sells to the U.S., its largest export market. This tariff rate is set to increase by an additional 25 percent on August 27, a punishment for India’s purchases of Russian oil and gas. India also faces the looming threats of indirect tariffs, including steep tariffs on pharmaceuticals and semiconductors and a 10 percent tariff on goods from countries that are members of the “anti-American” BRICS organization.
Trump’s tariff onslaught has forced India into a precarious position, and New Delhi is employing three strategies in tandem to get out of it.
Read the full article on The Diplomat.
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