Trump escalates trade tensions, potentially threatening decades-long relationships with India by increasing customs duties.
In a move that could significantly impact trade relations between the U.S. and India, former President Trump signed an Executive Order imposing a 25% tariff on imports from India, effective August 27, 2025. This tariff is in response to India's continued import of Russian oil, directly or indirectly [1][3][5].
The tariff threat has pushed India and Russia closer together, with the two countries deepening their relationship through new industrial agreements, high-level visits, and preparations for President Putin's visit to India. India's external affairs minister was also scheduled to visit Russia soon after [2].
The U.S.-India relationship, once strong, now faces a challenging and uncertain future. The tariff threat and related tensions risk a negative spiral, including Indian retaliation, additional American tariffs, restrictions on visas for Indians, consumer boycotts, canceled defense deals, and diplomatic distancing. However, there remains a possibility for improvement if either side adjusts its stance or priorities change regarding China, Russia, or other interests [4].
India has long bristled over Western pressure to distance itself from Russia, with whom India enjoys a decades-old relationship. The U.S.'s demand for agriculture and dairy products to be sold in India is a politically explosive demand due to the large number of workers engaged in agriculture in India [6].
Other industries, such as exports of gemstones, seafood, textiles, and more, may be badly hit by the tariffs, affecting tens of thousands of workers and potentially shaving billions off India's earnings. In 2024, India bought Russian oil worth more than US $47 billion, according to the Finnish think tank Centre for Research on Energy and Clean Air [7].
Nearly a third of India's total oil imports come from Russia. Indian analysts have noted that other major importers of Russian oil, such as China and Turkey, have not faced any additional punitive tariffs [8].
Indian officials have accused the U.S. of double standards for continuing to trade with Russia while punishing other countries for doing so. The U.S. may be using India's vulnerability as a bargaining chip in its ongoing trade negotiations with India [9].
The relationship between the U.S. and India, once a strong alliance, is unravelling. The two countries have held five rounds of trade talks since February without a major difference being resolved. The ongoing trade negotiations between India and the U.S. is another major point of contention, with the U.S.'s demand for agriculture and dairy products to be sold in India being a significant difference [2][6].
References: 1. CNN 2. The Hindu 3. Bloomberg 4. Reuters 5. NPR 6. The Indian Express 7. Centre for Research on Energy and Clean Air 8. The Diplomat 9. The Print
- The economic impact of the tariff might lead to a reevaluation of credit terms and trading practices between U.S. and Indian financial industries.
- The escalating war-and-conflicts tension between the U.S. and India over trade policies could have far-reaching consequences for the general news landscape, affecting global economic stability.
- Amidst the ongoing oil-and-gas trade disputes, ESG (Environmental, Social, and Governance) considerations could play a crucial role in shaping the industry's future, as more focus is placed on sustainable energy sources.
- As politics heated up due to the trade tariff impasse, policy-and-legislation discussions may center around finding a balance between national interests and maintaining strong defense alliances.
- The Defi (Decentralized Finance) industry could potentially provide solutions for emerging financial needs arising from geopolitical tensions, offering an alternative to traditional banking systems.
- The future of Individual Retirement Accounts (IRAs) for Indian investors with U.S. holdings might be affected, as the tariff conflict evolves and general market uncertainty increases.
- In the wake of the trade tariff war, Indian analysts and officials are urging for fair and transparent policies to address any imbalances in trade relations, ensuring a level playing field for all countries in the energy sector.
- As the U.S.-India relationship continues to deteriorate, the ongoing trade negotiations will be closely monitored by media outlets, with a focus on general news, policy-and-legislation updates, and potential shifts in political priorities.
