Tariffs, Alliances, and Power Plays: The Geopolitics Behind the US–India Trade

Introduction – Allies in Public, Adversaries in Policy

The United States and India have, for over two decades, presented themselves as natural strategic partners bound by shared democratic values, mutual economic interests, and a common concern over China’s rise in the Indo-Pacific. From the landmark 2005 Civil Nuclear Agreement to the deepening of defense ties through COMCASA and BECA, the relationship has evolved into one of Washington’s most crucial in Asia. Yet, beneath the optics of summits and joint naval drills lies a stubborn reality: the two nations have never been fully aligned on trade. The latest escalation, triggered by Washington’s imposition of tariffs of up to 50% on key Indian exports, is more than an economic dispute, it is a signal of the shifting fault lines in global politics, where strategic cooperation can coexist with economic confrontation.

The Political Backdrop in Washington

The roots of this tariff offensive lie in the United States’ domestic political calculus. President Donald Trump, returning to the White House on a wave of economic nationalism, has resurrected his “reciprocal tariffs” doctrine, a policy that frames trade deficits as a sign of exploitation by foreign partners. In 2024, India’s goods trade surplus with the US stood at nearly $40 billion, making it an easy political target. Imposing tariffs on Indian goods serves two purposes for Trump: appeasing protectionist voter bases in swing states like Pennsylvania and Ohio, where manufacturing job losses are blamed on imports, and sending a message to the world that no country, not even a close security partner, is exempt from his “America First” economic agenda.

The White House has also tied these tariffs to India’s reluctance to reduce imports of discounted Russian crude oil, a move that, in Washington’s view, undermines Western sanctions and blunts the effectiveness of its foreign policy. By linking trade penalties to geopolitical behavior, the US is effectively using tariffs as a diplomatic pressure tool.

India’s Russia Dilemma

India’s energy calculus is one of the central geopolitical fault lines in this dispute. Since the onset of the Ukraine war in 2022, New Delhi has dramatically increased imports of Russian crude, leveraging steep discounts to cushion domestic inflation and support its growth trajectory. In 2024, Russia became India’s largest crude supplier, accounting for over 35% of total imports. For the Modi government, this is not just about cheap oil it is about energy security, inflation management, and geopolitical balancing.

However, Washington sees these purchases as a strategic breach, especially given that India is a member of the Quad and a major defense partner. While India insists on its sovereign right to determine its trade and energy partners, the optics of deepening energy ties with Moscow while benefiting from US defense and technology partnerships has created friction. The tariff escalation is, therefore, not just a trade measure but a proxy battle over India’s geopolitical positioning.

The Indo-Pacific Chessboard

Both Washington and New Delhi have invested heavily in the idea of the Indo-Pacific as a strategic space where a “free and open” order must be maintained against coercive powers. The Quad comprising the US, India, Japan, and Australia has been the flagship platform for this cooperation, encompassing military exercises, technology partnerships, and supply chain initiatives.

Yet, the tariff war exposes a structural flaw: strategic partnerships in the security domain do not guarantee harmony in the economic domain. For the US, economic policy is a tool of strategic leverage, even with allies. For India, accepting economic coercion from a strategic partner risks setting a precedent that could be exploited by others. This disconnect could limit the depth of future Indo-Pacific cooperation, particularly in areas where economic and security interests intersect, such as critical minerals, technology standards, and maritime infrastructure financing.

China as the Unspoken Factor

Looming over the US–India tariff clash is the strategic question of China. The US has, over the past decade, increasingly courted India as a counterbalance to Beijing, both militarily and economically. The logic is clear: a strong, aligned India complicates China’s strategic calculations and provides Washington with a partner in shaping regional norms.

However, the tariff war risks undermining this logic. If the US is seen as an unreliable economic partner, one that weaponizes trade policy against allies, it may push India to diversify its strategic bets, including deepening ties with countries outside the US orbit. Beijing, which has been watching this dispute closely, stands to gain if economic tensions erode the US–India partnership’s broader strategic cohesion.

Bilateral Negotiation Dynamics

Efforts to resolve the tariff impasse have so far been halting. Washington has offered the possibility of sector-specific exemptions in exchange for “policy flexibility” on energy imports and regulatory barriers to US companies in India. New Delhi, however, has signaled it will not negotiate under duress, framing the tariffs as a violation of WTO principles and the spirit of the 2019 US–India trade understanding that ended the earlier tariff standoff.

Behind closed doors, negotiators face a complex equation: any concession by India could be seen domestically as capitulation, while the US risks political backlash if it rolls back tariffs without extracting tangible commitments. This deadlock means the dispute may persist well into 2026 unless external shocks such as a major supply chain disruption or Chinese strategic maneuver force a recalibration.

Global Ripple Effects

The tariff war is being closely watched across the Global South, many of whom see India as a model for balancing strategic autonomy with deep ties to Western economies. If Washington is willing to penalize India despite its strategic value, it sends a sobering message to other middle powers: US security partnerships do not guarantee economic immunity.

In parallel, alternative trade arrangements from BRICS initiatives to India’s growing role in the International North-South Transport Corridor could gain momentum as countries hedge against overreliance on US markets. The longer the tariffs remain, the more India will be incentivized to accelerate such diversification.

Conclusion – Strategic Patience or Strategic Pushback?

The US–India tariff war is more than a dispute over trade deficits it is a stress test for the future of great power partnerships in a multipolar world. For the US, it raises the question of whether short-term economic leverage is worth the potential long-term erosion of strategic trust. For India, it demands a careful balancing act: defending its economic sovereignty while preserving the security and technological benefits of partnership with Washington.

In the months ahead, the dispute’s trajectory will hinge on whether both sides can decouple their economic disagreements from their strategic alignment or whether the tariffs mark the beginning of a more transactional, less trusting phase in US–India relations.