Trump Tariff on India: Humanitarian Vision, Ukraine pressure tactic or something else?
On August 6, 2025, the White House signed an executive order adding a fresh 25% tariff on U.S. imports from India, explicitly linking the move to New Delhi’s continued purchases of Russian crude. The duty kicks in 21 days after the order and stacks on top of existing Trump-era tariffs, putting many Indian exports on the cusp of 50% duties. These are among the steepest levies that have been imposed on any USA trading partners.
While the decision was sudden, many analysts tried looking at the underlying reasons that might be influencing the decision. While the stated rationale is national security: the order cites the ongoing war in Ukraine and argues that penalizing countries importing Russian oil (India, in this case) helps starve Moscow of war revenue, however is it that or something else? Afterall, the same tariffs were not imposed on China which buys even more oil from Russia
Over the tenure of the Trump presidency the one thing that is clear is that President Trump loves making deals. So if we consider the past behaviour, what deal is Trump expecting this time? Let us unpack this -
1. Adding tariffs on India can be a pressure tactic to hit Russia by isolating it from its trade partners.
2. It could be a pressure tactic to bring Russia to the negotiating table and find a way to end the Ukraine war — something that Trump wants.
3. Trump wants the Nobel peace prize and he believes that the only way to get it is to stop the Russia-Ukraine war.
4. Pushing strong markets like India to buy more from US oil companies and increasing trade.
5. Weaponizing dollar and trade to ensure India opens its dairy and agricultural sectors as part of the impending US-India trade deal.
While all these are possible reasons, the recent statements from White House hint at it being an arm-twisting mechanism to get Russia to the negotiating table. At the start of the US President's term, he seemed confident about being able to stop the Russia-Ukraine war, once he was elected. He even declared President Putin to be his friend, who would be open to reasoning; however, after nearly three years, the situation is far from improved.
With lower popularity ratings within the US, discontent within the Republican Party and the far from effective results of the DOGE and immigration crackdown actions, it was important for the President to deliver success at international level. By arm-twisting India, America managed to get Russia to the negotiating table, however a lot depends on the kind of deal offered, for the negotiations to be truly successful.
There is a war fatigue that has set in and with President Trump being clear that they would not put American boots on the ground, the only other option is to help de-escalate and stop the war. The earlier interaction between Ukraine and the USA was far from cordial and hence it is important that the USA comes with a strategic plan to stop the war.
The Fall-out for India
On face-value, this might seem like a raw deal for India, however India seems well-equipped to push back against these tariffs, thanks to our decades old policy of non-alignment. Russia has been a trusted friend for India on the global stage, while our relation with the USA has always been a work in progress.
The SEC and the BRICS groupings have already started pushing back on the tariffs and are considering increasing trade partnerships within the groupings. The BRICS grouping, which has expanded and now also includes Egypt, Ethiopia, Indonesia and the United Arab Emirates, represents their geopolitical-cum-geohistorical voice in world affairs. Other African nations like Nigeria have also expressed interest in joining the BRICS. This is important as in today's multipolar, multilateralism, BRICS is seen as the voice of the Global South.
The USA rhetoric is that of hegemony while the Global South wants to pursue strategic autonomy to shield their economies from the sanctions or threats of the West. Trump's actions further fuel the fear of West weaponising trade, dollars and even aid.
While the US markets are lucrative, India continues to diversify to other markets. BRICS is the fastest growing part of the world economy. A Russian diplomat, while slamming the US tariffs, declared that if the goods cannot go to the USA, they can come to Russia.
If these tariffs come into force; there is currently a 21-day waiting period, certain sectors will have to absorb some of the costs. Businesses have already started finding ways to circumvent the barriers.
- Businesses are thinking about moving part manufacturing to other countries, where the tariffs are favourable.
- They negotiate long term contracts to ensure profitability while being viable.
- Some businesses have increased the pace of production and preponed shipping to avoid tariffs.
- US importers too will want to divert the goods from a third country to ensure the profitability is maintained.
- RBI's push for Vostro accounts would encourage trade partners to use Indian rupees for seamless trade. This will enhance monetary sovereignty, insulate trade from geopolitical disruptions and promote financial stability.
The reckless tariffs on most countries is not a good long-term strategy as it is viewed as sanctions, further alienating the US from its allies and friendly countries. If Trump follows his China script, then he might extend the implementation, if a ceasefire or some sort of de-escalation effort between Ukraine and Russia is successful. The US's policy of using tariff blackmail to subjugate countries will backfire as more countries look for alternatives to US markets. India's reaction of staying calm, working with its allies and continuing dialogue is a great approach to understanding the underlying agenda and calibrating India's response.