Members of the Indian Youth Congress protest towards the Modi authorities’s silence on the 26% tariff imposed by U.S. President Donald Trump in New Delhi, India, on April 5, 2025.
Amarjeet Kumar Singh | Anadolu | Getty Pictures
In February, U.S. President Donald Trump and Indian Prime Minister Narendra Modi exchanged heat greetings and bear hugs, and pledged to pursue an early trade agreement.
Now, six months on, that goodwill has soured. Trump labels India the “tariff king,” threatens higher levies within 24 hours, and accuses it of fueling Russia’s war in Ukraine through oil purchases.
That shift raises questions: Will India yield to U.S. strain, or push again and danger straining a two-decade partnership?
Former Singapore diplomat Bilahari Kausikan advised CNBC that India will at all times prioritize its nationwide pursuits. “India is [a] nation with a deep sense of self as an unbiased actor,” he stated, including it’s going to “by no means play deputy to any sheriff.”
On Wednesday, Trump vowed to “considerably” elevate tariffs on Indian exports, following a 25% hike and threats of penalties over Russian oil and arms purchases.
That marks a stark reversal from earlier optimism, when Modi and Trump aimed to double bilateral commerce to $500 billion by 2030.
Vice President JD Vance had agreed on phrases for a commerce deal, and Commerce Minister Piyush Goyal had anticipated “preferential” tariffs simply days earlier than the hike.
However Kausikan, who was additionally former everlasting secretary of Singapore’s overseas service, stated it is “absurd to suppose that simply because New Delhi is shocked at Trump’s tariffs, his insulting characterization of the Indian economic system as ‘useless’ and his flirtation with Pakistan, India will swing to China or Russia at U.S. expense.”
He was referring to Trump’s post on social media, which referred to as the economies of each India and Russia “useless.”
India leaned towards the Soviet Union through the Chilly Warfare, however after the us’s collapse, India deepened relations with the U.S., particularly below Presidents George W. Bush and Barack Obama.
“What introduced India and the U.S. collectively was a shared concern over China,” Kausikan famous. “That concern is not going away.”
As we speak, the 2 nations had elevated their partnership to a “Comprehensive and Global Strategic Partnership” with cooperation in defense, technology, and clean energy. India was designated a “main protection accomplice” by the U.S. in 2016.
Unraveling relationship?
Nonetheless, Evan Feigenbaum, Vice President of research the Carnegie Endowment for Worldwide Peace, warned in a commentary Monday that Trump’s actions might unravel greater than 20 years of progress.
Talking on CNBC’s “Squawk Box Asia,” he stated though there have been factors of disagreement of their bilateral relationship — comparable to India’s ties with Russia and the US’ ties with Pakistan — “they by no means let these third celebration relationships or issues bleed again into the bilateral relationship in ways in which had been very debilitating.”
“All bets are off now,” he added.
India’s External Affairs Ministry responded sharply to criticism over Russian oil purchases Tuesday, calling it “unjustified and unreasonable.” The ministry additionally identified that Western nations criticizing India are themselves persevering with to commerce with Russia.
Feigenbaum stated India sees that as “hypocritical” and “blame shifting,” saying that the West’s collective failure to cease the battle is now being pinned on India. He additionally famous rising unease from New Delhi over the US’ outreach to China.
Former U.S. ambassador to the U.N. Nikki Haley urged the administration to not “burn a relationship with a powerful ally like India,” highlighting that China, which is Russia’s high oil purchaser, obtained a 90-day tariff pause in Might.
Deal or no deal?
Prospects for a commerce deal seem slim. Feigenbaum stated Indian media, the general public, and the opposition are urging the federal government to not present weak point. “Even when there is a deal, the belief is gone,” he stated.
Former Indian Finance Secretary Subhash Garg echoed that sentiment on CNBC’s “Inside India” Tuesday: “Our positions are so completely different that there’s little or no risk of a reconciliation.”
He prompt India ought to soak up the export hit and diversify to home or various markets. “If there’s an American demand, they may purchase and let [the] American customers and the importers pay the tariff. Allow them to bear that.”
Nonetheless, former Indian Labor Secretary Sumita Dawra expressed cautious optimism to CNBC on Wednesday. She stated India hopes for “constructive outcomes” from commerce talks later in August.
She stated whereas tariffs could have an effect on exports, India’s home demand is “very excessive,” and pointed at different commerce agreements that the nation has been making, such because the India-U.Ok. free commerce settlement and the India-EU FTA, negotiations of that are anticipated to conclude later this yr.
“We’re on the lookout for a good, mutually useful deal,” Dawra stated. “I am certain our negotiators will do an awesome job.”