US-India Relations at a ‘Worst Moment’ as Trump Slaps 50% Tariff on New Delhi
US-India Relations at a ‘Worst Moment’ as Trump Slaps 50% Tariff on New Delhi
US President Donald Trump’s administration has levied a 50% tariff on India, the highest rate globally, signaling a significant downturn in the relationship between the two nations.1 This move, which comes amid stalled trade negotiations, puts India in a difficult position and challenges its diplomatic standing.2
The Shock of a 50% Tariff
On Wednesday, the US announced an additional 25% tariff on Indian goods in response to India’s continued imports of Russian oil, bringing the total tariff to a staggering 50%.3 This decision has surprised many experts, especially given the publicly friendly relationship between Trump and Indian Prime Minister Narendra Modi. For months, the two leaders have exchanged compliments and called each other friends. Now, India finds itself in a small group of countries facing the highest tariff rates, with only Brazil facing a similar penalty.
Experts believe this aggressive stance highlights a clear priority for the Trump administration: onshoring over “friend-shoring.” In other wods, Trump is more focused on bringing manufacturing and supply chains back to the US rather than strengthening economic ties with allies.4
“This is a very difficult moment, arguably the worst in many, many years,” said Vina Nadjibulla, Vice President of Strategy and Research at the Asia Pacific Foundation of Canada.5 “They now need some pragmatic path forward and need to find a way to rebuild trust.”
A Breakdown in Negotiations
The tariffs, set to take effect in three weeks, follow a series of recent events that hinted at growing disagreements between Washington and New Delhi.6 Just last week, Trump threatened to penalize India for its Russian oil and arms purchases and referred to the US and Indian economies as “dead.”7
Last year, bilateral trade between the two countries was approximately $212 billion, with a $46 billion trade gap in India’s favor.8 While Modi has ambitious plans to more than double this trade to $500 billion, recent negotiations have reached an impasse.9
During trade talks, India offered to reduce levies on US industrial goods and increase its purchases of American defense and energy products.10 It even considered scaling back taxes on cars, a concession that went against pressure from its strong domestic auto lobby.11
However, a key sticking point remained: India refused to remove duties on farm and dairy products.12 These politically sensitive sectors employ hundreds of millions of people, and New Delhi’s stance mirrored that of other nations like Canada.13
Geopolitical Tensions Add to the Strain
According to Farwa Aamer, Director of South Asia Initiatives at the Asia Society Policy Institute, the trade conflict also has a geopolitical dimension.14 A major point of friction was the disagreement over the recent clash between India and Pakistan in May.15
Trump has repeatedly claimed he mediated a ceasefire in the conflict, while India has just as consistently denied his involvement, stating that Modi and Trump never spoke during the crisis.16 Meanwhile, Pakistan has been working to reset its own relationship with the US, even announcing plans to nominate Trump for the Nobel Peace Prize.17 This has created a sense of unease in New Delhi.
“This will test India’s foreign policy,” Aamer said, raising questions about whether India can maintain its relationship with the US while also preserving its longstanding ties with Russia.18
Navigating a Tough Road Ahead
India’s Ministry of External Affairs has called the new tariff “unfair, unjustified, and unreasonable,” stating that its imports of Russian oil are essential for the energy security of its 1.4 billion citizens.19“India has this global standing, and Modi has this global standing, so it has to hold its own,” Aamer said. “It will maintain its stance that its national security is driving its foreign policy.”
In the near term, experts like Robert Rogowsky, a professor of international trade at the Middlebury Institute of International Studies, expect “very creative diplomacy” as both nations attempt to reset ties.20
For now, India may focus on strengthening other bilateral trade agreements, such as the one recently signed with the United Kingdom and another currently in the works with the European Union.21 India is also working to stabilize relations with China, with Modi reportedly planning his first visit to the country since a 2020 border face-off.
The trade blow from the US also comes at a challenging time for India, which has been positioning itself as a manufacturing alternative to China.22 While some sectors, like electronics, are currently exempt from the tariffs, a 50% tariff on other goods adds to the instability and uncertainty for businesses looking to invest in the country. This further reinforces Trump’s clear preference for onshoring, leaving allies like India in a precarious position.
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Source: Al_Jazeera
