Eleanor Hume and Kyle Rutter
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.
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.
First, New Delhi is confronted with the daunting task of securing a deal with Washington, without violating any key redlines that would jeopardize Modi’s domestic support. India is also attempting to delicately manage its geoeconomic relationship with China, cooling tensions with Beijing without ignoring preexisting military and economic security concerns. While hedging between the two great powers, India is also seeking to advance its geopolitical ambitions of assuming great power status by diversifying its economy to alternative partners.
Managing Trump’s Tariff Pressures
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