 "Trumpian misstep: How US tariffs bolstered India’s resolve for strategic autonomy")
The Donald Trump administration has underestimated both the structural sensitivities of the Indian economy and the strategic implications of overreliance on coercive diplomacy. It miscalculated that under its pressure, India, like Japan and the European Union (EU), would ultimately make major concessions affecting sensitive domestic constituencies. That miscalculation is proving costly for the US, for India has taken a firm stance against US pressure, highlighting its commitment to protecting its economic interests.
The latest tariffs imposed by President Donald Trump have prompted India to significantly recalibrate its foreign policy, shifting toward strategic partnerships with Russia and China while diversifying its economic relationships with other nations. This assertive stance prioritises Indian strategic autonomy, national interests, and economic resilience.
In response to the Trump tariffs—which reached a cumulative 50 per cent in August 2025—India has deepened its economic and strategic partnerships with Russia and China. India’s outreach to Russia and China was highlighted at the Shanghai Cooperation Organisation (SCO) summit, where Prime Minister Narendra Modi met with both Chinese President Xi Jinping and Russian President Vladimir Putin.
India has rejected US demands to cut off its purchases of discounted Russian oil, which the US government claims is funding Russia’s war in Ukraine. New Delhi argues that it must ensure its energy security and notes the inconsistency of punishing India while other countries continue to buy Russian energy. Amid US criticism over India’s discounted Russian oil purchases, India has affirmed its “special relationship” with Russia. India has made it quite clear that Russia, a long-time defence partner, remains a resilient ally. Thus, the US tariffs, combined with India’s continued purchase of Russian oil, have strengthened the historical India-Russia partnership.
Impact Shorts
More ShortsThe tariffs and US diplomatic pressure have also accelerated a rapprochement between India and China, which have had strained relations since a deadly 2020 border clash. In a notable shift, PM Modi’s recent meeting with Chinese leader Xi Jinping on August 31 is widely viewed as a move toward “pragmatic rapprochement” to secure economic stability amid US tariffs. The two nations agreed to resume trade ties and move toward resolving their border dispute. India needs Chinese investment to create jobs, while China sees India as a vital market amid rising protectionism from the US.
As a buffer against US protectionism, India has deepened trade and investment ties with other major economic blocs. India and the UK signed a landmark Comprehensive Economic and Trade Agreement (CETA) on July 24, 2025, after more than three years of negotiations. This agreement aims to eliminate tariffs on 99 per cent of Indian exports to the UK and reduce tariffs on 90 per cent of UK goods entering India, with significant tariff cuts on whisky, automotive products, and others.
The deal is expected to boost economic growth, increase bilateral trade, and include provisions for digital trade, professional mobility, and UK access to India’s government procurement market. It is the most significant trade agreement the UK has signed since leaving the EU and the most comprehensive deal India has completed outside of Asia.
The Free Trade Agreement (FTA) negotiations between India and the European Union have reportedly reached an advanced stage. It is expected that the agreement will be finalised by the end of 2025. The agreement will reduce trade barriers, enhance market access, and create new opportunities for businesses. The EU was the largest trading partner of India for goods, with the trade being $137.41 billion in 2023-24. The bilateral trade between the two sides in services was estimated at $51.45 billion in 2023.
India is also actively cultivating relationships with other nations committed to rules-based international trade, including Japan and Australia. For example, a visit to a Japanese chip factory by PM Modi underscores India’s intent to strengthen the semiconductor supply chain with allies. Following their summit in Tokyo, PM Modi and Japanese PM Shigeru Ishiba agreed to boost Japanese private investment in India to about $6.8 billion a year. They also agreed to increase exchanges of workers and students to half a million people in the coming five years. The two governments hope India’s young workforce can help address labour shortages caused by Japan’s ageing and declining population.
Starting with the elevation to a Comprehensive Strategic Partnership in 2020, India and Australia have significantly deepened cooperation on economic, strategic, and defence matters, driven by converging interests in the Indo-Pacific region and a mutual push for supply chain diversification away from China.
The landmark Economic Cooperation and Trade Agreement (ECTA), which entered into force in 2022, has greatly strengthened both economies. It has been instrumental in reducing trade barriers and has already saved Australian importers hundreds of millions in tariffs. Over 85 per cent of Australian goods exports by value to India are now tariff-free, rising to 90 per cent by 1 January 2026.
US tariffs under the Trump administration encouraged Australia to diversify trade, with India as a key alternative. The tariffs highlighted the potential unreliability of the global system, reinforcing the need for a deeper India-Australia economic partnership. The tariffs have also spurred both countries to accelerate trade negotiations.
Trump’s recent tariffs in 2025 have prompted both India and South Korea to explore strengthening their bilateral relations, even though the two countries’ responses to the US levies have differed. South Korea secured a trade deal with the US for a lower tariff rate, while India was hit with significantly higher duties. The two countries have an ambitious goal to increase the bilateral trade figure from $27.54 in 2024 to $50 billion by 2030.
Key areas for cooperation include technology, defence, and strategic partnerships, particularly in the Indo-Pacific region. A key challenge in the India-South Korea relationship is India’s persistent trade deficit with South Korea. India exports fewer goods to South Korea than it imports. India is seeking to diversify its exports to South Korea beyond traditional areas like mineral fuels and raw materials, with a focus on high-tech sectors, agricultural products, and services.
Brazil and India, the two countries most heavily impacted by US trade sanctions, are intensifying bilateral relations in a bid to mitigate the economic consequences of recent tariff hikes under Donald Trump. Bilateral trade between India and Brazil reached about US$ 12 billion in 2024, with a surplus in India’s favour. Brazil hopes to expand that figure significantly, aiming to surpass US$ 20 billion by 2030. Strategic sectors include agriculture (notably genetic technology exchange), pharmaceuticals, and energy. Brazil exports crude oil to India and imports refined products.
Another Latin American country which is becoming a key focus is Argentina. Trade between India and Argentina is dominated by Argentina’s exports of agricultural products, primarily edible oils, to India. While Argentina has typically held a trade surplus, both countries are working to diversify and expand their bilateral economic partnership, which has seen significant fluctuations in recent years due to external factors. Bilateral trade amounted to $5.2 billion in 2024 and shows signs of strong growth in 2025, driven by improved conditions in Argentina and stronger bilateral relations following PM Modi’s visit in July 2025.
India has also expanded ties with the Gulf and Africa. To secure energy and expand its economic influence, India has focused on strategic partnerships with Gulf states, such as a Comprehensive Economic Partnership Agreement with the United Arab Emirates and growing defence cooperation with Saudi Arabia. The trend of deepening India-Gulf ties is likely to continue, driven by mutual economic interests and India’s pursuit of a more diversified and multi-aligned foreign policy.
India is also revitalising ties with Africa, recognising its demographic and resource advantages. To counteract recent US tariffs, India is strengthening its ties with Africa by leveraging existing investments, relocating some production, diversifying trade, and developing regional value chains. This strategic shift aims to mitigate the impact of US protectionism while advancing both India’s and Africa’s economic goals.
Indian companies, particularly in the apparel and textile sectors, are expanding their manufacturing bases in Africa to avoid US tariffs. This allows them to continue exporting to the American market from a lower-tariff jurisdiction. Garment makers like Gokaldas Exports have factories in Kenya and Ethiopia, allowing them to increase exports from those locations. It is expanding operations there to avoid high US tariffs on Indian goods. Diamond merchants are also exploring expanding production in Botswana. Africa’s need to diversify its export markets, combined with India’s long-term investment approach, presents an opportunity for greater economic partnership and integration into global value chains.
Following recent diplomatic tensions, Canada has emerged as a renewed focus for India’s economic diplomacy, with both nations actively working to reset relations. Despite the 2023 political fallout, trade remained resilient and grew 3.2 per cent in fiscal year 2025, reaching $8.6 billion. Both sides are now taking steps to restore a comprehensive economic partnership.
The reset is motivated by a shared interest in diversifying trade and investment outside of reliance on the US, especially in light of changing global dynamics. Recent high-level meetings, including a meeting at the June 2025 G7 Summit, have initiated a process to reset relations, resulting in the appointment of new high commissioners to mend the damaged relationship and restore services for citizens and businesses. A positive tone has been set to revive trade talks and enhance economic partnerships.
In a nutshell, India has demonstrated its strategic autonomy by refusing to be pressured into a trade deal with the US and prioritising its national interests. By continuing to purchase Russian oil, India has signalled that its foreign policy is guided by its own interests, not by any superpower’s demands. India’s “multi-alignment” strategy allows it to engage with multiple powers simultaneously without being bound by rigid alliances. The reshaped global order has created new opportunities for India. By navigating geopolitical volatility and diversifying its partnerships, India can position itself as a central player in a multipolar world.
Many American analysts opine that the Trump tariffs will hurt the US. In his piece ‘Trump’s Tariff Tantrums Are Hobbling the US Economy’, Jeffrey A Sonnenfeld, a professor in the School of Management at Yale University, has stated that tariffs have fundamentally disrupted markets, leaving businesses vulnerable to the double threat of uncertainty and cost inflation.
John Mearsheimer, a leading American international relations expert and R Wendell Harrison Distinguished Service Professor of Political Science at the University of Chicago, has said that the Trump administration’s India policy is a “colossal blunder” and asserted that secondary tariffs on India for buying Russian oil “won’t work”.
Trump’s former National Security Adviser (NSA) John Bolton has said that he (Trump) “has shredded decades of efforts” made by the West to strengthen diplomatic and strategic ties with India with his “disastrous” tariffs.
The Washington Post has summed up the position quite well. As the title of its editorial comment on September 1 puts it, ‘Trump’s white-knuckling with India could backfire’.
A majority of Americans are quite concerned about tariffs, primarily due to the expectation that they will increase consumer prices and negatively impact the economy. Polls show significant disapproval and worry, with large numbers believing that tariffs will cause inflation, hurt businesses, and affect various sectors like agriculture.
While some see tariffs as a way to boost domestic manufacturing, this is often outweighed by concerns about rising costs and negative economic consequences. Even among Republicans, there is a significant level of concern about the inflationary effects of tariffs, though the disapproval rate is higher among independents and Democrats.
There are also mounting concerns because Trump has promised to impose hefty import taxes on pharmaceuticals, a category of products he’s largely spared in his trade war. Diederik Stadig, a healthcare economist with the financial services firm ING, wrote in a commentary that lower-income households and the elderly would feel the greatest impact of tariffs on pharmaceuticals. As he put it, “A tariff would hurt consumers most of all, as they would feel the inflationary effect … directly when paying for prescriptions at the pharmacy and indirectly through higher insurance premiums".
Multiple court challenges to tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) have been successful in lower courts. On August 29, 2025, the US Court of Appeals for the Federal Circuit ruled in a 7-4 decision that the majority of these tariffs are illegal and that the President lacks the constitutional authority under IEEPA to impose sweeping tariffs of unlimited duration on most US trading partners. The appeals court delayed the enforcement of its ruling until at least October 14, 2025, to allow the Trump administration time to appeal to the Supreme Court. President Trump has publicly signalled his intention to take the fight to the highest court.
Until the US court case is resolved and tensions ease between major economic blocs, global trade will continue to be destabilised by ongoing tariff battles. According to the UN Conference on Trade and Development (UNCTAD), the rules-based global trading system has been weakened, and countries are increasingly resorting to tariffs to pursue domestic policy goals.
As a result, many countries are engaging in bilateral negotiations to navigate and mitigate the effects of the US tariffs. India is also actively pursuing and expanding its bilateral trade network as a key part of its economic strategy. This strategy of diversification is to some extent a response to trade uncertainty with the US and is intended to provide India with greater negotiating leverage.
The writer is a retired Indian diplomat and had previously served as Ambassador in Kuwait and Morocco and as Consul General in New York. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.
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