For years, India has deftly maneuvered between global powers, reaping the benefits of its unique position at the crossroads of U.S.-China-Russia tensions. But the diplomatic balancing act that once brought economic windfalls and strategic leverage is facing its toughest test yet. On August 27, 2025, U.S. President Donald Trump announced a sweeping 50% tariff on nearly all Indian goods—a move that rattled markets, stoked nationalist sentiment in New Delhi, and threatened to upend one of Washington’s most critical partnerships in the Indo-Pacific.
India’s rise as a major economic player has been closely intertwined with its ability to play both ends against the middle. According to The Express Tribune, New Delhi has long spotlighted its potential as a counterweight to China in the region, while reaffirming its allegiance to groups like BRICS and the Shanghai Cooperation Organization (SCO), both of which are seen by Washington as vehicles for challenging U.S. global leadership and the dominance of the dollar. The strategy paid off handsomely, with successive U.S. administrations—from Trump’s first term to President Joe Biden—courting India as a vital Indo-Pacific ally, even as India deepened its trade ties with Russia and China.
But the calculus shifted dramatically after Russia’s full-scale invasion of Ukraine in February 2022. India’s imports of Russian oil skyrocketed, making up 42% of its total oil purchases by 2025, up from less than 1% before the war, as reported by Radio Free Europe/Radio Liberty (RFE/RL). India quickly became the largest buyer of Russian seaborne crude, at times swapping places with China for the top spot. In 2024 alone, India’s trade with Russia soared to $68 billion—about six times pre-pandemic levels—with $50.3 billion spent on discounted Russian crude, and almost 93% of bilateral trade comprising imports from Russia.
This surge in Russian oil imports allowed India to provide affordable energy to its 1.4 billion citizens and diversify away from pricier Middle Eastern grades. Indian refiners, including the energy giant Reliance Industries, capitalized on the opportunity, refining Russian crude and exporting it to Europe. As a result, Indian refined oil exports to Europe surged nearly 250% from 2019 levels, according to The Express Tribune. The Indian government argued that these purchases were not in violation of Western sanctions, so long as the deals met established parameters.
Yet, the U.S. saw things differently. The White House accused India of indirectly funding Russia’s war against Ukraine. Treasury Secretary Scott Bessent was blunt: India, he said, was profiteering from its sharply increased Russian imports. The Trump administration’s response was swift and severe: a 50% tariff, half of which was explicitly tied to India’s Russian oil purchases. The new tariff, among the highest in the world, threatened to damage the Indian economy—one that counts the U.S. as its largest trading partner and serves as a growing hub for American tech companies shifting manufacturing away from China.
India’s reaction was one of defiance. Prime Minister Narendra Modi, speaking on August 26, 2025, just a day before the tariff announcement, urged his countrymen to buy only locally made goods. "All of us should follow the mantra of buying only ‘Made in India’ goods," he declared, encouraging shopkeepers to display prominent signs promoting domestic products. "Pressure on us may increase [from the tariffs], but we will bear it." Indian External Affairs Minister S Jaishankar echoed Modi’s sentiment, calling Washington’s demand to halt Russian oil purchases "unjustified and unreasonable" and accusing the West of hypocrisy. Jaishankar pointed out that Europe trades far more with Russia than India does, and that India’s discounted oil imports were a pragmatic move to ensure affordable energy for its vast population.
Still, signs emerged that Indian oil companies might be preparing to reduce Russian imports. Bloomberg reported on August 26 that both state-owned and private refiners were planning to trim daily purchases from 1.8 million barrels to between 1.4 and 1.6 million barrels. The move, while not a capitulation, suggested that Indian industry was bracing for a prolonged trade standoff with Washington.
Behind the scenes, the tariff battle exposed deeper fault lines in U.S.-India economic relations. India maintains a $45.8 billion trade deficit in goods with the U.S., a gap that Trump has long railed against. According to World Trade Organization data cited by The Express Tribune, India’s simple average tariff rate stands at 17%—compared to America’s 3.3%—with agricultural tariffs a whopping 39% (versus the U.S. rate of 5%). Trump’s aides have been locked in negotiations with New Delhi since February 2025, seeking to boost U.S. military equipment and energy exports to India as a way to address the deficit. But as of late August, no deal had been reached, hinting at India’s reluctance to open its markets further to American goods.
Trump’s tariff blitz, while aimed at rebalancing trade, also carried strategic undertones. As The Express Tribune noted, Trump’s ultimate goal isn’t to sideline India, but to "weed out irritants from the bilateral relationship" and strengthen the U.S.-India partnership for long-term geopolitical goals in the Indo-Pacific. The administration’s "US-India COMPACT for the 21st Century" pledged to "elevate military cooperation across all domains" in the region. But the president made clear that, before any strategic deepening, he wanted to "settle the trade score."
Indian officials, however, warned that excessive pressure could backfire. Some suggested that being singled out for sanctions and tariffs might push New Delhi closer to Beijing and Moscow. Indeed, India’s ties with Russia remain robust, with External Affairs Minister Jaishankar traveling to Moscow in August 2025 to meet President Vladimir Putin, who is expected in New Delhi later this year. Meanwhile, Modi is set to attend the Shanghai Cooperation Organization summit in China from August 31 to September 1, where he’s expected to meet both Putin and Chinese President Xi Jinping. The summit comes as India and China seek to repair relations after deadly border clashes in the Himalayas in 2020. The Russian Embassy in New Delhi has even floated the possibility of a trilateral meeting between the three leaders.
In the meantime, India has also benefited from America’s "friend-shoring" policies, becoming—for the first time—the leading smartphone supplier to the U.S. But Trump’s aggressive tariffs threaten to shave off about half a percent of Indian GDP, according to estimates reported by The Express Tribune. The Indian government’s protectionist vision, encapsulated in Modi’s ‘Atmanirbhar Bharat’ or ‘Viksit Bharat 2047’ initiatives, mirrors Trump’s own ‘Make America Great Again’ ethos, relying on high tariffs and import restrictions to bolster domestic industry.
As the world watches, the U.S.-India relationship teeters between confrontation and cooperation. The stakes are enormous—not just for the two countries, but for the future of the Indo-Pacific and the global economic order. While both sides have much to lose, neither seems ready to blink first.
