On July 30, U.S. President Donald Trump announced a baseline tariff of 25 percent on Indian exports, along with “a penalty” for buying oil and military equipment from Russia. On Aug. 6, he signed an executive order (EO) placing “an additional ad valorem rate of duty of 25 percent” on India. It made clear that any retaliation against this order “may” lead to a modification of the order and would go into effect in 21 days. Furthermore, it said that if Russia or any foreign country impacted by the order were to “align sufficiently” with the United States on matters related to national security, foreign policy, and the economy, then the tariff rate could change again.
Essentially, if India continues to purchase Russian oil, the tariff stays and may be increased. If it starts to diversify away from buying Russian oil, then it could be reduced or removed. The EO has moved the goalpost beyond trade negotiations. Even if the first tranche of a trade agreement were to be reached, which is looking unlikely, India will still have to deal with the issue of its Russian oil purchases. White House trade advisor Peter Navarro has argued that “India’s oil lobby is funding Putin’s war machine.” Yet an attempt to force India to diversify away from Russia—effectively dictating its foreign policy—is a nonstarter. In fact, it only makes it more difficult to do what Indian firms may have already wanted to do, which is find alternative vendors in the global oil market.
Predictably, reactions in India have been severe. The Indian Ministry of External Affairs condemned both the baseline tariff and the additional penalty as unfair, unjustified, and unreasonable. In a statement, it pointed out that, in 2024, the European Union maintained a bilateral trade of 67.5 billion euros (around $78 billion) in goods with Russia. The United States, meanwhile, continues to import uranium hexafluoride, palladium, fertilizers, and chemicals from Russia for its industries.
Those who closely follow the U.S.-India relationship have argued that Trump “risks tanking twenty-five years of U.S.-India relations.” As Evan Fiegenbaum pointed out, the tariff announcement has led to the “repoliticization” of this relationship—and a sure route to a “slow-motion catastrophe.” Richard Rossow, an American analyst who has worked on the U.S.-India account for decades, warned that “Washington might be missing the broader benefits of the India-U.S. relationship.” CNN’s Fareed Zakaria, who has long advised Indian leaders to forge closer ties with the United States, made it clear that he would be “hard-pressed” to provide the same advice to India today.
In India, there are active moves to diversify away from the United States. Openings to China are being debated, and there will be support to engage more and differently with Russia, even from those who worked hard to do the opposite until only a few weeks ago. Looking to diversify markets, especially for sectors that will be most affected by the U.S. tariffs, a trade agreement with the EU will likely be high on the agenda for India’s negotiators. Nonetheless, for India’s own sake, and for a whole variety of economic, security, societal and technological reasons, a pathway forward needs to be found—even with an administration that has taken a chainsaw to the U.S.-India relationship.
As for the functional bureaucracy in the United States, there is still a general consensus that this is a strategic relationship that is important, even if it is not crucial. Almost every U.S. technology company has made large bets in India, and they continue to want to do so. From Google and Microsoft to firms with frontier artificial intelligence models, India is a market that matters. The U.S. Space Force works with Indian space startups. India currently purchases a considerable amount of defense equipment from the United States. There is a commercial, military, and political need in the United States to fix the current impasse. So, is it possible to get the bilateral relationship back on track? And if so, how?
First, there is a need for a backchannel between the two countries. This will need to be very different from the oft-quoted Jaswant Singh-Strobe Talbott process. The then-Indian foreign minister and then-U.S. deputy secretary of state undertook a government-sanctioned process to work together following India’s nuclear tests in 1998. Singh and Talbott met over a dozen times in airport lobbies and on the sidelines of global events. As Singh put it, the aim was to “find a connection.”
Since then, India and the United States have spent more than two decades deepening and widening this connection. However, there is currently little trust between officials from the two countries. On the U.S. side, there is clearly a hesitancy, even in closed-door settings, to go beyond the brief set by Trump’s public proclamations. For India, it’s simply difficult for officials to converse with the other side when key actors keep changing. There is still no Assistant Secretary of State in the U.S. State Department. There is currently no U.S. ambassador to India.
Insiders in the U.S. government have suggested that the current impasse could be mitigated if India made a public statement hinting at a diversification from Russian oil imports. What they overlook is the political and strategic reality that makes such an ask impossible, even if India has already taken, or may yet take, such steps for its own interest. A public statement at this time, especially following Navarro’s public pronouncement of India fueling the Russian war machine, will be seen as bending to American will. Within India, there is no public support to do more with the United States at this time.
What is missing is a bridge that communicates this subtext.
In the current setup, the best bet would be for influential non-officials from various industries and experts that track this relationship from both countries to speak to officials from the other side. This needs to be a nimble and low-lift process that does not require formal approvals. All it would require is inferred acceptance, not necessarily even a go-ahead from the two principals. Put simply, there is a need for interlocution.
Second, there is little doubt that the two sets of tariffs on India are inspired both by Trump’s changing disposition on Russia—and Russian President Vladimir Putin in particular—and also by his clear desire to be recognized by India as a peacebuilder that ended the recent India-Pakistan conflict. As for Russia, there is little that can be done; the mood may change very soon.
On mediation, Indian Prime Minister Narendra Modi made it clear on the floor of the parliament that “not a single world leader asked Bharat to stop Operation Sindoor.” On the Indian side, there is no question of mediation on an India-Pakistan conflict. Yet, the impasse will need to be addressed in some way. Trump has made it abundantly clear on social media that he wants credit for the end of the conflict.
Third, there is an important role for large U.S. firms that continue to invest billions of dollars in India and for Indian companies that are investing more in the United States to use their offices and networks. Unlike when Singh and Talbott invested in each other, and therefore also in the future of the world’s two largest democracies, today’s U.S.-India relationship is wider and has proliferated across multiple domains. There are hundreds of touchpoints that simply did not exist two decades ago and must be used to strategic effect. It is in the interest of these various stakeholders—from investors and venture capitalists to technology executives and consultants—to get involved. If not, they may well be served up as collateral in a situation where the wheels are close to coming off.
Lastly, at the functional level, meetings and prescheduled visits have not stopped. This is good news. There is enough appetite and still space at the administrative level to keep discussing substantive issues. This includes outcomes at Quad summits, another of which, as of this moment, is still likely to take place in New Delhi at the end of this year.
U.S. officials working on strategic technology ties between the two countries have been reorganized at the State Department. Conversations on AI infrastructure partnerships and Indian pharmaceutical investments into the United States continue. In many ways, the functional connection has played some part in injecting a degree of resilience at a time when the political relationship needs repair.
None of these actions are likely to turn back time or recover the trust that has been broken through successive announcements on tariffs, Russia, India’s economy, and much else. But there is a slim possibility that the bridge can be saved from burning if both sides are quick enough.
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