India now faces what can be best described as the Trump pill — a bracing dose of transactional geopolitics and neo-mercantilist tariffs that upend the diplomatic comfort of the past decade. With sweeping 25 per cent tariffs targeting Indian exports, our longstanding belief in strategic autonomy and global goodwill is being challenged by the brutal arithmetic of trade imbalances and national interests. This isn’t just a policy shift; it’s a call to recalibrate how India positions itself economically and diplomatically in a world now shaped by profit-first diplomacy.
The newly announced tariffs by the Trump administration pose a direct threat to India’s export competitiveness. Sectors such as electronics, smartphones, automobile parts, and gemstones will be hit hardest. Comparatively, Vietnam faces only 20 per cent tariffs, and economies like Indonesia enjoy relatively lighter penalties. While pharmaceutical products, semiconductors, and critical rare earths remain exempt for now, there is a growing uncertainty about India’s continued access to these carve-outs, particularly as Trump intensifies his focus on bilateral trade “wins.”
Further compounding this threat is the ambiguity around secondary sanctions tied to India’s oil imports from Russia. A punitive surcharge, conveyed repeatedly but not yet formalised, could be crippling. As we shall see, this issue is not merely economic — it strikes at the heart of India’s strategic alignment.
The stakes for India are high. Without a trade deal with the United States, economic ramifications could be severe. Capital flows may dry up, leading to a weakening rupee. Stock markets are already reflecting investor nervousness, and early estimates suggest India’s GDP could suffer a 0.2–0.5 per cent contraction. Unlike Brazil, which enjoys a trade surplus with the US, or China, which retains leverage through its monopoly over rare earth elements, India finds itself in a vulnerable middle.
India has little immediate leverage in trade. Brazil, for example, will enjoy strategic concessions from Washington, thanks to US having a trade surplus with it. China, with its iron grip over rare earth supplies, forced the US to capitulate during past confrontations. Meanwhile, Trump has succeeded in strong-arming traditional allies. He finalised a trade agreement with the EU after imposing 25 per cent tariffs on select sectors and billions of dollars promised in investment. He has also coaxed Japan into signing a deal with 15 per cent tariffs and $550 billion in investments. Likewise, he has already finalised a deal with Indonesia and Vietnam, both with lesser tariffs than India’s.
With India, however, talks have hit roadblocks — both economic and geopolitical. The US’ objections to India’s protectionism in agriculture and dairy are longstanding. But the deeper threat comes from Washington’s insistence on penalising Indian oil imports from Russia. Trump’s sudden support for the Blumenthal-Graham bill, threatening secondary sanctions on nations buying discounted Russian crude, marks a shift. Initially dismissed due to Trump’s own ambivalence toward Ukraine and open admiration for Vladimir Putin, the bill has reemerged as Trump pivots back toward Europe, leaving India exposed.
From strategic sweetheart to bargaining chip
India’s rise on the global stage in the past decade owed much to its favorable geopolitical moment. As the Indo-Pacific became the centre of global strategic focus, India was cast as a vital counterweight to China. Western powers embraced New Delhi’s role, drawn by its demographic strength, huge market, and democratic credentials. Prime Minister Narendra Modi’s assertive leadership added to this perception, projecting a self-assured India that could balance friendships and autonomy.
This moment reached its zenith during the Ukraine war. India walked a fine line — maintaining strategic ties with Russia by buying discounted crude, while presenting itself as indispensable to the West. With Europe quietly benefiting from Indian-refined Russian oil, India asserted its strategic autonomy with confidence. Critics were dismissed, and domestic media celebrated the country’s ability to chart its own course.
Yet the foundations of this narrative were shaky. India’s much-vaunted Make in India and Production Linked Incentive (PLI) schemes failed to attract the level of foreign investment once expected. American Apple and Swedish Saab were exceptions, not the rule. Despite diplomatic fanfare, manufacturing remained sluggish. India continued to import heavily from China to sustain its exports to the West, undermining the very essence of supply chain resilience it hoped to project.
Also read: Geopolitical forces beyond New Delhi’s control are at play in Trump’s approach to India
The US rope has slackened
India’s comfort with the US came in part from the Biden administration’s strategic long rope — granting India considerable leeway on Russia due to the overarching goal of countering China. Many in India, critical of the Biden administration’s occasional rebukes on human rights and democracy, waited for Trump’s return, expecting better and smoother alignment. After all, the Modi-Trump camaraderie, ideological proximity between the BJP and the American Right, and figures like JD Vance and Tulsi Gabbard, seemed to promise continuity.
At first, these hopes appeared justified. Trump’s flirtation with Russia and disdain for Ukraine were read as validation of India’s balancing act. His praise for Putin and indifference to Europe’s pleas bolstered Indian confidence that ties with Russia would remain acceptable to Washington.
But then the tide turned. Trump pivoted toward Europe, resumed arms shipments to Ukraine, and repositioned himself as the West’s unlikely saviour. India, once seen as a partner, became a laggard in aligning with Trump’s new vision.
Perhaps most jarring was Trump’s dismissiveness toward Indian strategic concerns. His tone-deaf response to India’s Operation Sindoor and flirtation with Pakistan — offering Islamabad a trade deal while brushing off India’s — sent an uncomfortable message. Even duties on Pakistan imports have been slashed from 29 per cent to 19 per cent. For Trump, no friendship is immune to the lure of leverage. That he ignored India’s history with cross-border terrorism and re-hyphenated India and Pakistan under the guise of repeated mediation claims was a rude awakening.
Meanwhile, Trump managed to secure trade deals with nearly every major global economy: Europe, Japan, the UK, Mexico, Canada, Indonesia, South Korea, Vietnam. India, once seen as central to America’s Indo-Pacific strategy, now finds itself isolated.
Also read: Trump’s tariff move undermines mutually beneficial India-US relationship, says Suresh Prabhu
Realism over rhetoric
The anger in New Delhi is understandable. But the time for rhetorical posturing is over. India must now seek a clear-eyed quid pro quo.
First, India must shed a self-referential sentimentality and recognise that it lacks the immediate leverage others enjoy. China remains an unreliable neighbour, exploitative and opportunistic. Tactical rapprochement cannot substitute for structural mistrust. India’s opening to China must be measured, lest it be exploited to Beijing’s advantage.
Second, we must accept hard truths about our own vulnerabilities. Agriculture and dairy sectors are resistant to reform not because of the US deep state, but because successive Indian governments have failed to modernise them. Red tape and a weak investment climate deter foreign capital more than any external factor.
Third, India must reassess the costs and benefits of its Russian oil strategy. While the $40-50 billion revenue generated from refining and reselling crude is tempting, the potential long-term costs — in the form of investor flight and punitive tariffs — could outweigh short-term gains. That said, optics do mean a lot, if not all, in diplomacy, and a decision on Russian crude must be made with caution, not knee-jerk sentimentality.
Resilience, not retaliation
India’s future lies in pragmatism. Protectionism must be phased out gradually, not in disruptive shocks. Strategic autonomy must not mean rigidity — it must evolve into an agile, resilient policy that adapts to changing global currents.
We must also discard the notion that foreign policy is fueled by sentiment, friendships or nostalgia. Professional diplomacy demands clear cost-benefit analysis and the ability to compartmentalise accordingly.
Trump’s transactionalism may be vulgar, but it forces us to shed illusions. India cannot continue conflating status with power. Instead, it must create incentives and build resilience, accepting that just like us, others too work in their national interest.
To preserve our economic aspirations, India must remain at the negotiation table with the US. Services remain our strength, even though they are not part of the current trade deal. And any deal should be designed to arrive at a point where this advantage can be leveraged. This may require short-term compromises, but it could prevent long-term economic marginalisation.
India must tread cautiously. Alienating the world’s largest economy now — just as global supply chains reconfigure and capital seeks new destinations — could undo years of economic progress and increase the risk of falling into the web of Beijing’s designs, succumbing to junior partner status in southern Asia.
The objective, therefore, is not to placate Trump, but to do the best it takes for India’s national interest.
The real challenge is not to resist every external pressure, but to align our domestic reforms with the demands of a changing world. In doing so, India can uphold its sovereignty, protect its interests, and continue to rise — not as a victim of global shifts, but as a deft navigator of them.
Swasti Rao is a Consulting Editor (International and Strategic Affairs) at ThePrint. She tweets @swasrao. Views are personal.
(Edited by Aamaan Alam Khan)