The recent imposition of 25 per cent tariffs by the United States on Indian imports has altered global trade relations. This move follows India’s refusal to open key agricultural and seafood markets during multiple rounds of trade talks. Additional penalties were later applied due to India’s continued purchase of energy and arms from Russia amid the ongoing Ukraine conflict. These developments have introduced new tensions in the growing strategic partnership between India and the US.
Background of US Tariffs on India
Recently, the US announced a 25 per cent tariff on Indian goods citing India’s protectionist stance in agriculture, dairy, and shrimp sectors. In August, an extra 25 per cent penalty was imposed linked to India’s energy and defence imports from Russia. The US administration invoked emergency powers to enforce these tariffs, despite such actions traditionally requiring Congressional approval. The tariffs aim to pressure India to align with US geopolitical interests, particularly concerning the Russia-Ukraine war.
Geopolitical Context and Trade Relations
US President Donald Trump sought to end the Russia-Ukraine conflict through diplomacy involving Russian President Vladimir Putin, Ukrainian President Volodymyr Zelensky, and European leaders. The US agreed to supply arms to Europe as a security guarantee for Ukraine. However, bilateral talks between Russia and Ukraine remain stalled, making the lifting of tariffs unlikely. The US accuses India of indirectly funding Russia’s war efforts by purchasing and refining Russian oil for resale to Europe. India denies violating sanctions, pointing out that China and the EU are larger buyers of Russian energy.
India’s Strategic Position and Trade Partnerships
India’s trade with Russia has grown despite the war, primarily due to energy needs. India aims to achieve a $100 billion bilateral trade target with Russia by 2030, focusing on resolving tariff and non-tariff barriers. India emphasises national interest over geopolitics in trade decisions. Meanwhile, India maintains strong diplomatic ties with China, which recently eased export restrictions on key products and agreed to resume border trade and cultural exchanges. India also prepares to assume the BRICS presidency in 2026, signalling its growing global influence.
Impact on Indo-US Relations and Domestic Economy
The tariffs have strained the Indo-US trade relationship, which has grown substantially over 25 years. US advisors supporting tariffs cite India’s profit from Russian oil refining as prolonging the Ukraine war. However, internal US debates show inconsistencies, such as the absence of sanctions on China’s larger Russian oil imports. India’s government focuses on domestic economic reforms like GST reductions to support sectors affected by tariffs. Indian leaders continue to view the US as an important partner and address trade issues with a constructive approach.
US-China Trade Dynamics and Global Implications
The US-China trade relationship remains complex, with ongoing negotiations and tariff disputes. China’s leverage in rare earth exports affects US defence and technology sectors. While the US imposes tariffs on multiple countries, including Brazil and India, the strategic calculus varies. The global trade environment is increasingly influenced by geopolitical conflicts, energy dependencies, and shifting alliances, making multilateral cooperation and diplomacy critical.
Economic and Security Concerns in Trade Policies
US officials link Russia’s war economy and inflation to energy revenues from countries like India. The US Treasury marks the growing share of Russian oil imports by India compared to China. However, questions remain over selective targeting and the broader impact of sanctions on global markets. Energy security, defence cooperation, and economic stability are intertwined in current trade policies, reflecting the complexity of balancing national interests with global peace efforts.
Questions for UPSC:
- Taking example of the US tariffs on India, discuss the impact of trade sanctions on bilateral relations and global diplomacy.
- Examine the role of energy security in shaping international trade policies with reference to the Russia-Ukraine conflict and its global repercussions.
- Analyse the strategic importance of rare earth minerals in international relations and its influence on US-China trade negotiations.
- Discuss in the light of India’s trade relations with Russia and China, how emerging economies balance national interests with global geopolitical pressures.
