Prof M K Bhat
In my previous article titled ‘Is BRICS a Threat to America’ in this newspaper dated 23/4/2025, I had mentioned how two prominent economies in BRICS i.e. India and China defied American sanctions on Russia and had also apprehended the growing threat to dollar from BRICS local currency transactions. It was obvious that America would retaliate to curtail the growing strength of BRICS. It tried to threaten China by applying high tariff but Chinese counter action humbled it and it started to target India as a soft option without visualising that India can go to any extent to protect its agriculture and Dairy farming as they involve 50% of its population. This puerile decision of Trump administration is likely to have its ramifications not only on Indo- US trade but it can go beyond boundaries by uniting not only BRICS countries but even those who were forcefully made to sign trade agreements best suited to American economy. People as on today are eager to know whether India, China and Russia together will write the obituary of American hegemony or not.
The tariff bomb targeted on India by USA is likely to change international geopolitics especially if China and India get together. As per news reports Modi is soon going to visit China in SCO meeting and China is also warm about this visit. The road between Beijing and New Delhi is getting smooth by Russian plaster. The BRICS members Brazil, Russia, China, and India have publicly shown their resentment against America’s tariff policy. Today BRICS has 21 member countries and involves 40 percent of world trade,50% of world population and the combined GDP of BRICS has surpassed G7 group in 2025. The high handedness of Trump administration is likely to further consolidate BRICS countries and their growing financial settlement in local currency will write the final chapter of American dollar dominance. If America believes that India can be cowed by pressure it is doing a big mistake.
The two main concerns peeving Trump are 1) India buying crude from Russia and it allegedly helps in prolonging Ukraine – Russia war 2) It feels threatened by BRICS and wants India to disassociate itself. Both these allegations carry little meaning because they are only to harass India. China bought Russian oil worth $62.6 bn, more than India’s $52.7 bn. In 2024 EU bought $39.1bn worth of Russian goods. The European Union in 2024 had a bilateral trade of Euro 67.5 billion in goods with Russia. In addition, it had trade in services estimated at Euro 17.2 billion in 2023. This is significantly more than India’s total trade with Russia that year or subsequently. European imports of LNG in 2024, in fact, reached a record 16.5mn tonnes, surpassing the last record of 15.21mn tonnes in 2022. The United States imports from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilisers as well as chemicals. It is easy for anyone to understand that when US or European trade with Russia is not going to finance war how come India’s trade with Russia will do. This has exposed the real Trump to world.
It may not be out of way to say that ever since Donald Trump came to power in his 2nd term his protectionist policies are creating problems for economies across the globe and till date nearly 100 countries signed trade agreements with America under the threat of tariff. Currently Trump uses his Tariff card to make countries to follow his trade policies. In this melee he failed to see that ‘New India’ can’t be easily cowed by pressure building techniques. India is a sovereign country of 1.46 bn people, going to be 3rd largest economy with a robust growth rate of 6.5%.It is free to decide, what to buy and from whom to buy? The interests of Indians have to be taken care of. America has no role in this case. The defiance of India against Tariff hike has put America in a Tizzy. If Trump administration withdraws from its stated position it will mean bowing before India and if it goes ahead it will lose a big market and may consolidate anti American countries. It is worthwhile to mention here that the protectionist approach had acrimonious fruits after world war 2nd and had led to Bretton woods conference.
America’s relations with reference to India are unpredictable at present. The anti-India tirade of Trump started with the inhuman treatment to the illegal immigrants from India,(They were handcuffed, chained during their deportation while as no such treatment was given to immigrants from china) warned Tim cook not to invest in India, offered to mediate to resolve the Kashmir issue, erroneously saying it was “a thousand years old” dispute (it dates back to 1947) ,declared umpteen times that his mediation led to ceasefire between India and Pakistan during operation sindoor, described India as a dead economy and announced a 50 per cent tariff on Indian imports and hinting at additional penalties for India’s continued purchase of Russian crude oil and military equipment.
The behaviour of Trump towards India has not only been puerile in his second term as president but it was provocative too. He invited General Munir of Pakistan just after operation sindoor, approved a package of roughly $400 million to maintain Pakistan’s F-16 fighter jets, extended a second invitation to General Munir in a short span of time, did family owned Crypto currency deal with Pakistan, didn’t use veto power to stop the IMF aid to the terrorist nation and signed a new energy deal with Pakistan to explore and develop the latter’s oil reserves, claiming that Islamabad might export oil to India “someday.” The US president clearly hinted after Pahalgam incident that Pakistan was closer to USA.
India responded by justifying its shift to Russia for crude and termed the targeting by US and European Union as “unjustified and unreasonable”. It officially declined the U.S. offer to purchase F-35 fighter jets, citing strategic constraints and Trump’s new tariffs on Indian goods. India is also developing its own fighter jet, the HAL Tejas, besides Russia’s Su-57 has emerged as the top contender, with Moscow offering co-production and Make-in-India support. F-35’s inability to integrate with non-NATO weapons and its $100M+ price tag made it less viable for India. The shift signals New Delhi’s pivot in defence policy amid strained U.S.-India trade ties.
The escalation in India’s merchandise trade is irritating America. It is no doubt that U.S. remains India’s largest trading partner for fourth consecutive year in 2024 -25.In 2024, the trade relationship between India and the US resulted in a surplus for India in merchandise trade, with a surplus of $45.7 billion. India’s exports to the US were $87.4 billion, while imports from the US were $41.8 However, the U.S. goods and services trade with India totalled an estimated $212.3 billion in 2024, up 8.3 percent from 2023. This includes both goods and services, where the US had a services trade surplus of $102 million.
Trade works for the betterment of both the trading countries. To point out that India is earning and we are losing is utter nonsense. If America will restrict India’s trade, the Government of India may be compelled to consider reimposing the digital tax on income from online digital advertisements by US companies. It would be highly detrimental for US tech. giants like Microsoft, Meta, Alphabet, Google, Amazon, etc.
(The author is Professor Emeritus (M.A.I.T) Guru Gobind Singh Indraprastha University, Delhi)
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