In a dramatic turn for global geopolitics, US President Donald Trump’s decision to impose a sweeping 25% tariff on all Indian exports from August 1, 2025, has triggered alarm bells in New Delhi and beyond. The move—coupled with an added penalty for India’s continuing oil and arms trade with Russia—has not only upended years of careful economic and security dialogue but could recalibrate strategic alignments in Asia.
The Economic and Strategic Stakes
India is the world’s fourth-largest economy and, until now, was the US’s fastest-growing trade partner in Asia. The export figures speak for themselves: Indian goods exports to the US reached $87 billion in 2024, with software and IT services adding another $33 billion. But Trump’s tariff wall could render Indian products uncompetitive in the US—India’s single biggest export market.
Beyond the damage to trade, the White House is leveraging these tariffs as a diplomatic “stick,” explicitly linking tariff relief to India’s willingness to distance itself from Russia. In recent years, India has dramatically expanded energy purchases from Russia and deepened its defense ties, especially for arms purchases and anti-missile systems—despite US disapproval.
India Shoots Down US F-35 Deal
In a visible sign of fraying trust, India has shelved talks to buy the US-made F-35 stealth fighter jet. Even before the tariffs, Delhi balked at the acquisition, citing high costs, maintenance complexity, and lack of US willingness to co-produce or share key technologies. Instead, India is opting for homegrown military programs and exploring joint production with Russia, notably for the Su-57 stealth fighter—further strengthening its partnership with Moscow.
This decision is emblematic of the larger realignment at play. The US had viewed deepening defense ties—symbolized by potential F-35 sales—as a way to pull India away from Russia. That effort now appears, if not dead, then certainly stalled.
Could China Fill the Void?
If India is forced to look east, China stands to gain. The two Asian giants have a long history of rivalry, but common cause may emerge from shared frustration with US moves seen as coercive. Both India and China are active in BRICS and the Shanghai Cooperation Organization, where they increasingly coordinate on issues ranging from non-dollar trade settlements to regional security. The tariff shock may accelerate India’s engagement with these alternative, non-western economic and security frameworks as a counterbalance to US pressure.
Is Delhi’s Calculus Retaliation or Accommodation?
For now, India is exploring increased imports of US goods such as natural gas, gold, and tech equipment to reduce its trade surplus rather than launching immediate countermeasures, seeking to “keep the door open” for negotiations. But patience is wearing thin. The risk is not just economic loss, but a sense of strategic marginalization: by targeting India while cozying up to others—including, most notably, Pakistan—Trump risks pushing Delhi deeper into the arms of his main geopolitical competitors.
Trump’s Soft Spot For Pakistan Brought on by Business Interests?
Trump’s approach to Pakistan exposes a different attitude. Recent trade talks resulted in a US-Pakistan deal to develop that country’s “massive oil reserves,” with Pakistan reportedly escaping with a much lower 19% tariff compared to India’s 25% hit. Speculation abounds that Pakistan dangled lucrative business opportunities—oil, minerals, crypto investments—before Trump’s inner circle, aligning with past patterns of blending personal business with policy. While hard evidence of direct business motives in US policymaking remains elusive, the optics are unmistakable and widely discussed in diplomatic circles.
By flirting with Islamabad, Trump is not only leveraging regional rivalries to extract concessions from Delhi, but possibly also positioning the US to tap into energy and resource sectors where his family and associates have keen interests. The realignment may be partly transactional, but also reflects a broader search for new strategic footholds as US interests pivot away from old security paradigms.
A Risky Gamble for US Asia Strategy
The 25% tariff may pressure India in the short run, but the longer-term result could be the opposite of what Washington intends: by alienating a rising democratic ally, the US risks undermining its Indo-Pacific strategy and accelerating an Asian realignment where India finds more common ground with Russia—and, potentially, even with China.
As negotiations continue, India’s willingness to walk away from the US defense table marks a milestone. How far Delhi shifts—towards Moscow and perhaps even Beijing—depends on events Washington itself has set in motion.
