Trump’s Tariff Gamble Crashes America’s Ties With India at Risk but Annex II of Exemption of EO 14257 covering Key Raw Material is Exempted

As the president pursues his goals on Russia and trade, America’s relationship with an important partner in Asia could end up as collateral damage.

Overview:

President Trump has escalated trade tensions with India by imposing a 50% tariff on Indian goods, doubling the previous rate. The move is intended to pressure India into halting its Russian oil imports, which Trump claims help fund Russia's war in Ukraine.

Key Points:

· Strategic Gamble:

Trump’s decision is driven by his desire to force an end to the war in Ukraine and assert his foreign policy dominance, particularly in the lead-up to possible talks with Russian and Ukrainian leaders.

· India’s Reaction:

India denounced the tariffs as “unfair, unjustified and unreasonable,” arguing that it is being punished for actions (importing discounted Russian oil) that other countries like China and Turkey also undertake without consequences.

· Potential Fallout:

o The move threatens to weaken U.S.-India ties, which have grown closer in the past 25 years, especially on strategic and economic fronts.

o The Quad alliance (U.S., India, Japan, Australia), intended to counter China’s influence, may be strained. India is supposed to host the Quad Summit this year, and Trump’s attendance is now uncertain.

· Economic Impact:

o US is India’s largest export market, but the higher tariffs could cut its $86+ billion export value to the U.S. by half.

o As exports contribute nearly 20% of India’s GDP, the tariffs would significantly harm India’s economy, especially if it must also pay higher prices for non-Russian oil.

· U.S. Strategic Risks:

o Analysts warn that India could pivot more toward Russia and China, reducing U.S. influence in Asia.

o American firms like Apple, which have invested in India as an alternative to China, could also be impacted.

· Diplomatic Frictions:

o India has rejected Trump’s claim that he mediated a cease-fire with Pakistan in May, asserting it was a bilateral decision.

o Trade negotiations between the U.S. and India have stalled, particularly over sensitive Indian sectors like agriculture and dairy.

· Selective Targeting?

o Despite being the biggest importer of Russian oil, China has not faced similar tariffs — possibly due to ongoing U.S.-China trade talks.

o The tariffs on India appear to be part of Trump’s broader geopolitical strategy — leveraging trade tools for foreign policy gains.

[ABS News Service/07.08.2025]

President Trump has staked enormous political capital on being the one to end the war in Ukraine, even asserting that he could do so “in 24 hours.” In perhaps his biggest gamble yet to achieve that goal, he pledged on Wednesday to punish India with tariffs of 50 percent for buying Russian oil.

At stake is the relationship between the United States and an increasingly important strategic partner in Asia. India, the world’s most populous democracy, and the United States, its most powerful one, have an unusual relationship. They are friendly but not close, brought together by mutual interests and shared values, especially in recent decades.

On Wednesday, Mr. Trump seemed ready to ditch that relationship. He doubled already hefty tariffs on Indian exports to the United States for its steadfast refusal to stop buying oil from Russia, in an effort to pressure Russia to end the war. Mr. Trump has accused India of helping Russia finance its war on Ukraine through oil purchases; India has said it needs cheap oil to meet the energy needs of its fast-growing economy.

India called the additional tariffs “unfair, unjustified and unreasonable,” pointing out that it was being punished for doing something — buying Russian oil at a discounted price — that other nations have done, although it didn’t mention names. China is the largest buyer of Russian oil, and Turkey has also deepened its energy links with Russia since the start of the war in Ukraine, without incurring similar penalties.

Analysts said Mr. Trump’s pressure tactics could damage the longstanding ties between India and the United States.

“We are better off together than apart,” said Atul Keshap, a retired U.S. diplomat and president of the U.S.-India Business Council. “The partnership forged by our elected leaders over the past 25 years is worth preserving, and has achieved considerable mutual prosperity and advanced our shared strategic interests.”

It’s difficult to quantify what exactly America would lose if its relationship with India cools. India is a valuable strategic partner for the United States, acting as a counterweight to China. It is also important to many American companies, including Apple, which has shifted some manufacturing of its products to India from China.

Ajay Srivastava, a former trade official at the Global Trade Research Initiative, a New Delhi-based think tank, said the U.S. action “will push India to reconsider its strategic alignment, deepening ties with Russia, China and many other countries.”

India and the United States, along with Japan and Australia, are part of a diplomatic partnership called the Quad, set up largely to counter China’s growing influence in the Indo-Pacific region. India is planning to host the Quad Leaders’ Summit later this year. Mr. Trump was expected to attend, although it’s now unclear if he will.

For India, the costs of a damaged relationship may prove to be higher. Mr. Trump’s move puts Prime Minister Narendra Modi in a bind. Russia is the source of 45 percent of its oil imports. If India stops buying Russian oil, accepting higher prices for consumers and domestic manufacturing, it would be politically damaging for Mr. Modi’s government.

If it ignores Mr. Trump’s threat and continues buying Russian oil, the hit to India’s economy will be far costlier. The higher tariffs could cut India’s more than $86 billion in exports to the United States by half, according to the Global Trade Research Initiative, an Indian research group. The United States is India’s biggest trading partner, and exports account for nearly 20 percent of India’s economy. India ranks only 10th among American trade partners in goods.

India has also come to value American backing for its bid to be recognized as a global superpower. Mr. Modi has touted his relationship with Mr. Trump, courting the U.S. president during his first term in office and calling him a “true friend.”

But that friendship, as many American allies have learned, may mean little when Mr. Trump’s own priorities are at stake.

In recent weeks, Mr. Trump announced that he had struck deals with Japan, Korea and the European Union, but even after months of negotiation, India had not reached an agreement. India was reluctant to make concessions on politically sensitive sectors like dairy and agriculture.

India also publicly denied Mr. Trump’s repeated claims that he helped broker a cease-fire between India and Pakistan after a brief, four-day conflict between the two neighbors in May. India has maintained that the cease-fire was negotiated bilaterally with Pakistan, and Indian leaders bristled at Mr. Trump’s willingness to insert himself into that bitter rivalry.

It is not yet clear whether the punitive tariffs Mr. Trump has threatened will ever take effect. In the executive order he issued on Wednesday, Mr. Trump said the tariffs would be implemented within a month, but he could modify the order if circumstances changed. The order included a provision that the United States would look at other countries’ purchases of Russian oil as well.

So far, there is no indication that Mr. Trump intends to take a similar approach to China, which is the biggest buyer of Russian oil. Chinese and U.S. officials are in the middle of sensitive negotiations about potential trade agreements after an initial round of retaliatory tariffs threatened to destabilize the global economy.

With his tariff moves against India, Mr. Trump is keeping his eye on big strategic goals — a deal with China, and keeping the pressure on Russia before a potential meeting with the leaders of Russia and Ukraine, which he disclosed on Wednesday.

Far from being “a dead economy,” as Mr. Trump’s called it, India is the fastest-growing large economy in the world. But its place on the president’s list of priorities may be much less certain.