The escalating trade and energy dispute between India and the United States is threatening to reverse over two decades of diplomatic progress and could have wider consequences across multiple areas of cooperation, officials and analysts warn, as political pressures harden positions on both sides.
Trump on Wednesday imposed an additional 25 percent tariff on Indian imports, doubling the total duty to 50 percent, in retaliation for New Delhi’s continued imports of Russian oil. The move has been sharply criticised by Indian opposition leaders and the public, who have urged Prime Minister Narendra Modi to stand firm against what they describe as Trump’s “bullying tactics”.
Despite being a key strategic partner for Washington in countering China, India’s sizeable trade surplus with the US and its energy ties with Moscow have drawn the ire of Trump. He is ramping up pressure on countries maintaining close ties with Russia, as part of efforts to force a resolution to the Ukraine conflict.
Trump’s suggestion that India could turn to arch-rival Pakistan for oil purchases has further inflamed tensions in New Delhi. Indian officials have also rejected Trump’s repeated claims that he used trade leverage to end past military hostilities between India and Pakistan.
In an unusually direct statement, India accused Washington of “double standards” for targeting it over oil imports while continuing to import Russian uranium, palladium, and fertiliser. It called the new tariff measures “unfair, unjustified and unreasonable”, and pledged to take “all necessary actions” to safeguard national interests.
However, Indian officials acknowledge that any further escalation could be costly. Unlike China, India lacks strategic leverage—such as rare earths supply—to force Washington into a favourable trade agreement.
Successive US administrations, including Trump’s first term, have invested heavily in deepening ties with India, viewing it as central to balancing China’s regional influence. However, analysts now warn the relationship may have entered its lowest point since the US imposed sanctions following India’s 1998 nuclear tests.
“India is now in a trap: because of Trump’s pressure, Modi will reduce oil purchases from Russia, but he cannot admit this publicly without appearing to bow to blackmail,” Reuters quoted Ashley Tellis of the Carnegie Endowment for International Peace saying. “We could be heading into a needless crisis that unravels a quarter century of gains.”
Indian state refiners have already halted Russian oil purchases amid narrowing discounts and mounting US pressure.
Analysts say deeper challenges lie ahead, particularly over divergent positions on immigration, tech visas, and offshoring—issues that resonate strongly with Trump’s political base. India has been a key beneficiary of US work visa programmes and outsourcing trends, often a contentious topic in American domestic politics.
“India risks becoming a football in US domestic politics,” said Evan Feigenbaum, a former senior State Department official. He noted that issues such as H1B visas, offshoring, and technology collaboration are increasingly polarising.
While India and the US have expanded defence cooperation and intelligence sharing—particularly through the Quad alliance with Australia and Japan—relations have been strained in recent years.
In late 2023, the US accused Indian elements of plotting to assassinate a Sikh separatist on American soil, a charge New Delhi has denied. Images of shackled Indian deportees arriving in military planes earlier this year also drew widespread outrage in India.
“The Modi government’s credibility in the US has been eroded,” said Sukh Deo Muni, former diplomat and professor emeritus at Jawaharlal Nehru University. “If this trend continues, India could face serious diplomatic challenges.”
Indian officials indicate that while efforts are ongoing to de-escalate tensions with Washington, New Delhi is also exploring deeper ties with other countries targeted by Trump’s tariff and aid policies—including those in the African Union and the BRICS bloc.
India has intensified engagements with both Russia and China. Russian President Vladimir Putin is expected to visit India later this year. On Tuesday, Moscow said both nations had discussed further defence cooperation within the framework of their “privileged strategic partnership”.
India is also preparing for Modi’s first visit to China since 2018, a shift from years of military tension following the deadly 2020 border clash.
“Russia will try to leverage the rift by reviving the Russia-India-China trilateral and pitching new defence projects,” said Aleksei Zakharov of the Observer Research Foundation. “India, however, will weigh structural constraints such as sanctions on Russia and continue seeking compromise with the Trump administration.”