Dr Ganesh Malhotra
Donald Trump’s reiterated threat of significant tariff impositions on Indian exports in 2025 has established a pivotal economic and strategic issue in the contemporary history of India-US ties. Trump’s administration has introduced a punitive tariff regime, reaching as high as 50%, aimed at India’s crucial export sectors, citing market access restrictions, ongoing relations with Russia, and an expanding US-India trade deficit. Consequently, India is positioned at the forefront of a volatile and evolving global trade landscape.
This escalation is not simply an economic conflict but a deliberate effort by Washington to redefine India’s overarching strategic alignments. Economic coercion is as much about geopolitics as it is about trade, as evidenced by the timing, which comes just after New Delhi flatly rejected American mediation claims in the May 2025 India-Pakistan ceasefire, which was bilaterally brokered through direct military channels. The explicit exclusion of US-aligned electronics industry, including iPhones built in India, from these tariffs exemplifies the selectivity and complexities of Trump’s economic strategy.
A pillar of India’s foreign policy has been its strategic autonomy, which it learned from ancient writings like Arthshastra and Mahabharat. This autonomy has allowed the country to traverse challenging international environments while defending its interests. The phrase itself suggests that a country is capable of making its own strategic choices free from excessive outside interference, especially from superpowers. India’s strategic independence has been put to the test recently by a number of global developments.
History has consistently demonstrated that efforts to coerce India by economic measures or diplomatic intimidation frequently produce outcomes contrary to their desired objectives. India’s 1971 action in East Pakistan occurred despite American naval deployments, demonstrating that external pressure merely fortified India’s commitment to strategic autonomy and self-reliance. The present moment reflects this history, necessitating a response from India grounded in unity, clarity of intent, and a revitalization of its international diplomatic alliances.
India’s initial response has been multifaceted, encompassing both defensive economic strategies and proactive diplomatic initiatives. New Delhi underscores the resilience of the US-India strategic partnership, maintaining wide avenues of engagement and utilizing the substantial rise in bilateral trade as a safeguard against potential disruptions. Notwithstanding emphatic statements from Washington, neither party has departed from the negotiation table. India has demonstrated a readiness to progressively augment purchases of specific American commodities-natural gas, advanced communications technology, and gold-intended to reduce the trade deficit without acquiescing to all of Trump’s demands.
However, India’s response goes beyond tactical discussion and accommodation. India is adjusting its trade and investment policies to lessen its reliance on any one market, particularly one as volatile as the Trump-led US, after realizing that the tariff threats are a part of a bigger tremor rattling the world order. Delhi’s efforts to form new trade alliances have accelerated significantly. Analysts have called on India to lead the Indian Ocean Rim Association by putting forward a proposal for an India-led Free Trade Agreement (FTA), while also indicating a desire to get closer to mega regional trading blocs like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
These actions fulfil two objectives. Initially, they establish new export markets for India’s expanding manufacturing and technology industries, alleviating the risks associated with prohibitive American tariffs. Secondly, they serve as clear indicators of India’s dedication to strategic autonomy-a notion that has been fundamental to Indian foreign policy. The objective is not merely to “resist” American influence, but to reinvent India as a catalyst for a multipolar international order, capable of engaging constructively with all major countries without succumbing to binary divisions. India is promoting alternative trade and banking systems within BRICS to reduce Western economic influence, while also serving as a proponent of Global South diplomacy, presenting a development paradigm beyond hegemony. Moreover, leveraging its vast diaspora, India is transforming cross-border political capital into strategic benefits, enhancing its credibility in international forums.
Internally, India is using a strategy that focuses on making its industry more resilient and making its technology more self-sufficient. This is being done by expanding production-linked incentive (PLI) schemes and increasing investment in dual-use technology and infrastructure.
India’s determination on exposing and denouncing what it perceives as attempts at information manipulation, such the claim that the US mediated the most recent truce between India and Pakistan, is equally significant. Narrative management is just as much a component of statecraft in the age of hybrid warfare as military deployment or tariff-setting.
In Indian circles, optimism endures in spite of this. Experts point out that significant US interests are not fundamentally threatened by India’s export portfolio, which includes everything from pharmaceuticals to car parts and jewels. This might make direct, long-term American trade action more difficult to maintain. Furthermore, analysts contend that rather than being a prelude to a trade war, such tariff threats are frequently a ploy to get India to the negotiating table. In order to do this, India is carefully adjusting its reaction, relying on its solid foundations, growing its international alliances, and making only small compromises to protect its long-term interests at home.
In conclusion, India has reacted to Trump’s assertive tariff stance not with alarm, but with a calculated and strategic combination of engagement, reform, and realignment. It is enhancing its coalition-building with regional allies and global blocs, creating alternatives to the dollar-centric trading system, and establishing itself as a normative and developmental leader of the Global South. Domestically, India is relying on its manufacturing capabilities, cohesive messaging, and collective political resolve to navigate challenges. Historically, efforts to coerce India typically provoke a reinvigoration of national resilience and the fortification of foreign alliances-a lesson currently being reaffirmed and actively implemented in response to Trump’s recent tariff threats.
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