The India-US trade relationship is currently facing significant turbulence, marked by escalating tariffs and accusations that threaten to undermine years of diplomatic efforts. US President Donald Trump has recently imposed a 50% tariff on most US imports from India, a move he justifies as a punishment for India's continued purchase of discounted Russian oil. The US argues that these purchases indirectly fund Russia's war against Ukraine. This decision has sparked considerable debate and concern among experts and officials in both countries.
Ashley J. Tellis, a US strategic affairs expert, believes that President Trump feels "cheated" that he did not receive credit for resolving the India-Pakistan conflict in May 2025. This sentiment may be influencing his approach to trade relations with India. Trump has also publicly stated that India has offered to reduce its tariffs to zero, although the timing and details of this offer remain unclear. He has frequently criticized India as a "tariff king" and pointed to the trade deficit between the two countries as a major point of contention.
India's perspective is that it has been unfairly singled out for its trade relationship with Russia. External Affairs Minister S Jaishankar has called Washington's demands to cease Russian oil imports "unjustified and unreasonable," highlighting that Europe's trade with Russia far exceeds India's. To comply with the US demand, India would need to replace approximately 42% of its oil imports.
The imposition of tariffs has broader implications for the global geopolitical landscape. Former US National Security Advisor John Bolton has criticized Trump's tariff policy, arguing that it has "shredded" decades of Western efforts to align India away from its Cold War ties with the Soviet Union and address the growing influence of China. Bolton suggests that Trump's actions provide an opportunity for Chinese President Xi Jinping to reshape the geopolitical landscape in the East.
Despite the trade tensions, both the US and India have expressed interest in continuing discussions toward a bilateral trade agreement (BTA). Talks for a BTA began in March 2025, with the goal of completing the first phase by October-November 2025. The aim is to more than double bilateral trade to $500 billion by 2030. However, the recent tariff hikes have complicated these negotiations. India has raised concerns about US demands to open its agriculture and dairy sectors, fearing harm to its farmers.
In response to the US tariffs, India has sought consultations with the World Trade Organization (WTO) regarding the 50% duty on certain copper products. India exported copper products worth $360 million to the US in FY25. India has also reserved the right to impose retaliatory duties on select US products.
The US-India relationship remains strategically important despite these trade disputes. The US Embassy in India has affirmed that the relationship is a "defining relationship of the 21st century". However, the ongoing trade tensions pose a significant challenge. Experts suggest that rebuilding trust and fostering a more balanced economic relationship will be crucial for the future of US-India ties.
As of September 2025, the situation remains fluid. Negotiations for a BTA are ongoing, but the tariff issue needs to be resolved. India hopes to resume negotiations soon, but the US has not yet finalized new dates for the next round of talks. The coming months will be critical in determining whether the two countries can overcome these challenges and forge a stronger economic partnership.
