On September 4, 2025, President Donald Trump signed an executive order to implement a long-anticipated trade pact with Japan, a move that was supposed to signal stability and progress in U.S. trade policy. But behind the scenes, the landscape is anything but settled. Many of Trump’s tariffs, especially those imposed on a global scale, remain ensnared in legal battles. A federal appeals court ruled in late August that most of these tariffs were illegal, stating the president had exceeded his authority by invoking emergency powers. Yet, in a twist, the court allowed the tariffs to remain in place while the appeals process plays out, leaving businesses and foreign governments in a state of uncertainty, according to filings cited by major news outlets.
Seeking to shore up his trade agenda, Trump has asked the Supreme Court for an immediate hearing to overturn the appeals court’s decision, pushing for arguments to begin as early as November. The administration’s urgency is palpable. On September 3, Trump warned that if the Supreme Court does not uphold the tariffs, the U.S. may have to “unwind” existing trade deals with major partners like the European Union, Japan, and South Korea. “If we don’t win that case, our country is going to suffer so greatly,” Trump told reporters before a meeting with Polish President Karol Nawrocki. “These deals are all done. I guess we’d have to unwind them.”
Meanwhile, Trump’s trade maneuvers have triggered a cascade of global consequences, none more pronounced than in the fraught relationship between the U.S. and India. Beginning August 27, Indian exports to the U.S. have been slapped with a steep 50% tariff, including a 25% penalty specifically tied to India’s continued oil purchases from Russia. As reported by The Globe and Mail, the Trump administration’s adviser Peter Navarro has accused India’s “oil lobby” of fueling Moscow’s war in Ukraine. New Delhi, for its part, has pointed out that China is the largest buyer of Russian oil, and that Europe still imports Russian natural gas—yet neither faces such penalties.
This sudden escalation has thrown India-U.S. relations, which had steadily improved over the past two decades, into an unprecedented crisis. A U.S. trade delegation visit to India, scheduled for August, was abruptly canceled, with no new talks on the horizon. The Trump administration’s displeasure with India’s trade surplus and protectionist policies, especially in agriculture and dairy, has been a sticking point. President Trump has repeatedly referred to India as a “tariff king,” blaming the country’s high tariff wall for the U.S. trade deficit.
In 2024, bilateral trade in goods and services between the two countries totaled a hefty US$212.3 billion, with U.S. goods exports to India at US$41.5 billion and imports from India more than double, at US$87.3 billion. The newly imposed tariffs could shave off about 0.5% from India’s annual GDP growth if they persist for more than a year, potentially dragging growth below 6% from a forecasted 6.5%, according to economic analysts cited by The Globe and Mail. While key Indian exports like pharmaceuticals and electronics remain exempt, sectors such as textiles, apparel, automobile parts, leather goods, and gems and jewellery are expected to bear the brunt—particularly small and medium enterprises.
Adding insult to injury, India now finds itself at a competitive disadvantage compared to its regional rivals. Pakistan and Bangladesh face much lower tariffs of 19% and 20%, respectively. This discrepancy has not gone unnoticed in New Delhi, especially as the U.S. has recently signed trade and energy agreements with Pakistan, including joint development of its oil reserves. Furthermore, the White House’s warm reception of Pakistani military chief Field Marshal Asim Munir—shortly after a violent military confrontation between India and Pakistan in May—has rattled Indian officials. Trump’s repeated claim that he personally brokered the Indo-Pakistan ceasefire, and India’s refusal to credit him for it, has only deepened the diplomatic rift.
With Washington’s cold shoulder, New Delhi has been forced to reassess its foreign policy priorities. Prime Minister Narendra Modi’s attendance at the Shanghai Cooperation Organization summit in Tianjin from August 31 to September 1, his first visit to China in seven years, fueled speculation about a possible pivot toward Beijing and Moscow. Chinese Foreign Minister Wang Yi’s visit to India in August, the resumption of direct flights, and the lifting of Chinese export controls on rare earth magnets have all signaled a thaw in relations. Both sides have even resumed coordinated patrols along their disputed Himalayan border, and Modi met with Chinese President Xi Jinping at the 2024 BRICS Summit—their first such meeting in five years.
Yet, as The Globe and Mail reports, the underlying tensions between India and China remain unresolved. The 3,488-kilometer disputed border, known as the Line of Actual Control, continues to be a flashpoint, with fears of incremental territorial gains by Chinese troops. India has accelerated the construction of border infrastructure, such as the Sela Tunnel, to ensure year-round access to its northeastern frontiers, while China has built villages and military facilities near the frontier. Mutual suspicion is still the order of the day.
On the economic front, Indian industry is eager to deepen ties with China, especially as Beijing recently lifted export restrictions on rare earth elements. However, India’s dependence on Chinese components poses risks, as highlighted by supply chain disruptions earlier this year. Despite calls to diversify away from the U.S., the Chinese market is unlikely to fully compensate for lost American demand, given its own non-tariff barriers and manufacturing overcapacity. In fact, Indian exports to China have declined by about 15% over the past year, and New Delhi remains wary of “dumping” by Chinese manufacturers.
Speculation has swirled about the emergence of a China-India-Russia axis, especially after images of Modi, Xi, and Putin together at the Shanghai Cooperation Organization summit. Yet experts caution that this is more optics than substance. India remains committed to its principle of “strategic autonomy,” seeking to diversify its partnerships rather than tie itself to any single bloc. Despite current strains, India continues to court relationships with France, Israel, Australia, the EU, Japan, and the UK, as well as the U.S., in areas ranging from trade and technology to defense and critical minerals.
Meanwhile, Canada-India relations are on the mend after 18 months of diplomatic strain. Both countries have reinstated high commissioners, established law-enforcement cooperation, and signaled renewed interest in economic engagement—especially in light of shared concerns over U.S. tariffs. Canadian Foreign Minister Anita Anand recently described the appointment of a new envoy to India as crucial for "strengthening the bilateral relationship to support Canada’s economy." Prime Minister Mark Carney has pointed to India’s economic dynamism and its role in global supply chains as compelling reasons to reset ties, though talks of a free trade agreement remain on hold.
As the global order shifts, India’s resolve to pursue strategic autonomy and diversify its economic and diplomatic partnerships has only grown stronger. While the turbulence in the India-U.S. relationship is undeniable, the shared interests that have underpinned their partnership for two decades remain. Repairing the rift will require sustained effort and goodwill on both sides. For now, India stands at the crossroads—balancing old alliances, new opportunities, and the ever-present challenge of navigating great-power rivalry.