Trump’s tariff shock has strained India–US ties, testing New Delhi’s strategic autonomy as it balances BRICS, the Quad, and a rent-seeking America.
The return of Donald Trump to the White House has injected new volatility into the global order, reshaping how India rebalances its strategic alignments between an increasingly complex vortex of differently aligned actors and groups. Gone are the soft assurances of ‘partnership’, replaced now by a bracing revival of economic coercion and zero-sum calculus. At the forefront is the American economic hegemony, driving down policy impositions on other countries with just one consideration: what is in it for the United States (US)? Little does it realise that all recipient countries will ask the same question for themselves. Trump may have accurately predicted that most states would comply due to the strong whip of American tariffs, economic costs, and its political burden/pressures. With allies, there is an additional cost to confronting the US; their security guarantees, both in material and deterrence terms, would deteriorate or vanish. However, it failed to recognise that a scorched-earth economic policy intended to enforce a shift towards America will create an equally powerful countercurrent among some economies that wish to wean away from a rent-seeking American economy. The period from the beginning of the Russia-Ukraine war, galvanised by the conflict in the Middle East, has culminated in the US changing its course to serve just its own interests. This complex mix will compel rebalancing all across the world, a trend which has begun. For New Delhi, Trump’s punitive tariffs, rhetorical broadsides, and transactional approach to diplomacy present new challenges and opportunities.
The return of Donald Trump to the White House has injected new volatility into the global order, reshaping how India rebalances its strategic alignments between an increasingly complex vortex of differently aligned actors and groups.
President Trump slapped a sweeping 25 percent tariff on Indian exports effective 7 August 2025, cataloguing India alongside all BRICS (Brazil, Russia, India, China, and South Africa) economies under a ‘special penalty’ for Russia‑related trade. This initial move—following a pause in US-India trade talks—was swiftly followed by an announcement on 6 August stating the imposition of an additional 25 percent tariff, which came into effect on 27 August 2025, bringing the total tariff tally to 50 percent on most Indian goods exported to the US. Far from an isolated move, this was part of a broader Trumpian campaign to ‘stop global freeloading’, targeting friend and foe alike. Simultaneously, Washington has offered 'special arms deals' and access to technology to both allies and adversaries, complicating its tech competition with China. What remains to be seen is whether the Trump administration will open key technology access to newer countries—provided there is enough economic advantage—even if they do not align with Washington politically. Trump’s acerbic remark that “India has become a dead economy”, only propped up by the reference to ‘unfair trade,’ was calculated to sting, potentially pressurising New Delhi to cool its deepening engagement with Russia. The speed and sweep of these actions have quickly resonated in the Indian masses, where the fragility of US reliability is rapidly traversing from assumption to belief.
The causal relationship between India buying Russian oil and the inability of Donald Trump to bring the Ukraine conflict to a halt is a false binary. Washington, too, is clearly pursuing a broader geopolitical strategy. Trump’s constant reference to and targeting of BRICS as a group is perhaps the most telling of all. Trump has threatened to hit the BRICS ‘very, very hard’ aside from threatening to impose an additional 10 percent tariff on nations that side with the group. The fact that BRICS nations together account more than 40 percent of the global economy is certainly drawing attention in Washington. In addition to this is the contentious question of de-dollarisation, which Trump has perceived as a direct assault on the dollar—one he believes must be confronted. Yet, what has unfolded on the ground is quite the opposite of Washington’s expectations. Rather than fragmenting, the pressure from Washington has, in fact, pushed the Global South to consolidate its footprint even more firmly, despite still maintaining dialogue with the US. For countries such as India, membership in BRICS or broader engagement with the Global South is not viewed as a stark choice—whether to opt out of BRICS or to align policy exclusively with the US. A facet that Washington often fails to acknowledge is that India’s position—despite its characteristic ambiguity—is in fact clear. It perceives its role within BRICS and its relationship with the US as two independent tracks that can most certainly coexist.
The period from the beginning of the Russia-Ukraine war, galvanised by the conflict in the Middle East, has culminated in the US changing its course to serve just its own interests.
Much like many other states, India has also pursued a ‘hedging’ strategy, preserving strategic autonomy by cultivating ties with both Western and non‑Western power blocs. In BRICS, India positioned itself as a voice for the Global South, championing currency reform, development finance, and global rule‑making that checked all asymmetric ambitions. In the Quad, it leveraged maritime domain awareness and intelligence cooperation while resisting any push toward a formal alliance. This balancing act thrived in a relatively stable global environment. It enabled India to participate in Chinese‑sponsored and dominated economic platforms without endorsing Beijing’s strategic designs, and deepen defence cooperation with the US and Japan without entering binding treaty commitments. The primary objective of this issue-based alignment was to avoid holding its autonomy hostage to any actor.
The Russia-Ukraine conflict tested India's ability to balance its position since the war began, despite being widely misunderstood as India's comfort zone. India's repositioning prevented a stark binary choice of opting for one camp, withstanding it throughout the conflict. However, with Donald Trump's tariffs, India's ability to navigate difficulties is further compromised, even as the manoeuvrability may have shrunk. Nonetheless, to expect India to alter its fundamental economic concerns in trade negotiations simply by caving to tariff pressures from Washington may be an oversized ask. As such, agriculture and pharmaceuticals remain India’s red lines, while Washington’s demands stay inflexible. What is now concerning is that increasing economic friction could cast its shadow on key aspects of the India-US bilateral relationship, including defence, economic, and political ties.
India is far from a passive player in its engagement with the US. Its vast market and investment potential remain prized by American and European firms; US imports from India rose 27 percent in the five months before the tariff hike. Subsequently, India’s energy imports have also increased in recent months. Amidst a trend from the last two decades, where the India-US relationship only gained in trust and value, the political intransigence from Washington does not augur well. It is rapidly turning into the semblance of a tariff strategy towards grandstanding.
India is not alone in being pushed into a diversification strategy against the punitive policies from the US. As such, diversifying and deepening ties with ‘issue‑based’ mini‑laterals and regions such as the Shanghai Cooperation Organization (SCO), BRICS, the Association of Southeast Asian Nations (ASEAN), IBSA (India, Brazil, and South Africa), and Latin American Countries is as much a reactionary policy as the need of the hour. Responding to the rising US tariffs, India is enhancing collaboration with Brazil, China, and Russia to establish a cohesive Global South position through BRICS and G20, leveraging this coalition-building to maintain adaptability as global institutions and leading nations become increasingly unpredictable. This is not mere brinkmanship: by avoiding blanket endorsements or sweeping bargains, India safeguards flexibility at a moment when both the credibility of global institutions and the reliability of major powers are in question. Extended US tariffs will hit labour-intensive export sectors; potential tech and finance restrictions could raise investment costs. Then, there are other externalities, such as the unknown fate of the US-China trade negotiations and how it positions China in the global supply and value chains. If China weaponises its trade links, India risks a dual economic shock just as global growth falters.
Far from forcing a binary choice, these competing positions enable New Delhi to champion flexibility, issue‑based coalitions, advance national interests, and serve as a bridge between competing visions of the global order.
Perhaps a good timeline for both India and the US to work against in managing their differences will be the next Quad Leaders’ summit later this year. The Quad Leaders’ Summit 2025 and the BRICS summit in 2026, which India will chair, are contrasting realities of India’s global engagement, which cannot be wished away on the back of an anticipated loss of a few billion. The Quad and the BRICS roles combine the ambition of leadership and the necessity for India. While the Quad gives India a platform to advance Indo‑Pacific cooperation and present itself as a trusted security and technology partner in the region, BRICS participation offers a chance to shape the bloc’s trajectory, push reforms in development finance and digital governance, and amplify India’s voice for the Global South, despite some of the contradictions within the organisation related to China. Far from forcing a binary choice, these competing positions enable New Delhi to champion flexibility, issue‑based coalitions, advance national interests, and serve as a bridge between competing visions of the global order.
Trump’s second term may have strained India’s multi‑aligned approach, but it also has underscored a blunt reality: strategic autonomy depends as much on the shifting interests of partners as on India’s own choices.
Vivek Mishra is Deputy Director – Strategic Studies Programme at the Observer Research Foundation.
Sandra Thachirickal Prathap is a Research Intern with the Observer Research Foundation
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Vivek Mishra is Deputy Director – Strategic Studies Programme at the Observer Research Foundation. His work focuses on US foreign policy, domestic politics in the US, ...
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Sandra Thachirickal Prathap is a Research Assistant with the Observer Research Foundation’s (ORF) Strategic Studies Programme (SSP). Her research examines the geopolitical dynamics of the Global ...
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