Tariff politics make India Trump’s favourite target – but what’s driving his fixation?

US President Donald Trump has sharply escalated his trade offensive against India, slapping an extra 25% tariff on certain imports and pushing the total levy on those goods to 50%. The move is aimed squarely at New Delhi’s continued purchases of Russian oil.

Asked why India was being singled out while other big buyers, including China, face no similar penalty, Trump hinted at broader action to come. “It’s only been eight hours,” he said. “So let’s see what happens. You’re going to see a lot more… so many secondary sanctions.”

The decision has triggered a diplomatic storm and raised questions about why Washington is targeting a country it counts as a strategic partner in countering China. For Trump, India’s deepening energy ties with Moscow appear to outweigh its role in the US’s Indo-Pacific strategy.

A collision of interests:

The tariffs are explicitly linked to India's burgeoning trade with Russia. India, the world's third-largest oil consumer, has seen its purchases of Russian crude surge dramatically since 2022, with Russia now accounting for roughly 35-40% of its total oil imports, as reported by Bloomberg.

Also Read: If not Russia, then who? Trump tariff blow may push India for oil diversification

This shift was a strategic move by India to secure affordable energy at discounted prices following the invasion of Ukraine.

From Washington's perspective, this trade is a direct lifeline for Moscow, a fact President Trump has highlighted. However, India has accused the US of a "pattern of coercion, selective enforcement, and political hypocrisy," noting that the US and its allies continue to trade with Russia in goods like uranium and palladium.

This conflict extends beyond oil.

India's defense ties with Russia are a critical, long-standing pillar of its foreign policy, with over 60% of its military equipment sourced from Moscow. This reliance makes it difficult for India to simply abandon Russia's strategic partnership.

The Trump administration's tariffs are widely seen as an attempt at "geopolitical arm-twisting" to force India to make a choice between its long-standing ally and its relationship with the US.

The timeline:

It started in February, when Donald Trump slapped tariffs on Canada, Mexico and China, but notably spared India. That didn’t mean New Delhi was in the clear. Trump made it clear that higher duties were coming.

On February 14, Modi met Trump in Washington, trying to ease tensions. Both leaders agreed to work on a trade deal and set an ambitious target: boost bilateral trade to $500 billion by 2030.

The mechanics of how they would get there remained vague, but Modi expressed confidence that a deal could be wrapped up later in the year.

Also Read: 'A slow-motion catastrophe': Trump is setting fire to decades of US-India diplomacy

Momentum appeared to build. On March 3, Trade Minister Piyush Goyal flew to Washington to kick off negotiations. By April 21, US Vice President JD Vance was in New Delhi, talking up “progress” on the talks as both sides finalised the terms of reference for an agreement.

Then came the first bump.

On May 10, Trump publicly claimed he had stopped military hostilities between India and Pakistan by dangling possible trade concessions to both.

New Delhi rejected the claim, calling it inaccurate.

Still, on May 17, Goyal returned to Washington with senior officials, and Commerce Secretary Sunil Barthwal declared that talks were moving “very well.”

By late June, Trump was talking like a deal was within reach.

“We have one coming up, maybe with India, a very big one, where we’re going to open up India,” he told reporters on June 27.

But when an Indian delegation returned to Washington in July, another round of discussions ended without a breakthrough. Goyal insisted India would act in the “national interest,” not just to meet artificial deadlines.

Everything changed on July 31.

Also Read: Trump rules out trade talks with India amid 50% tariff dispute until...

Trump imposed a 25% tariff on Indian imports, warning of more to come over India’s continued purchases of Russian oil. He went further, deriding India’s economy as “dead.”

Less than a week later, on August 6, Trump escalated again, vowing an additional 25% import tax to punish New Delhi for its Russia ties. That pushed the combined tariff rate to 50%, with the new duties set to kick in within 21 days.

The economic underpinnings

The new tariffs also double as bargaining chips in a trade negotiation that has been stuck for years. Trump has long branded India the “tariff king,” often citing the hefty US goods trade deficit, $45.8 billion in 2024, according to the Office of the US Trade Representative, as proof.

That year, US goods exports to India stood at $41.5 billion, up 3% ($1.2 billion) from 2023, while imports from India hit $87.3 billion, up 4.5% ($3.8 billion). The gap widened by 5.9% ($2.6 billion) from the previous year.

Talks have repeatedly faltered over sensitive sectors. India has refused to cut tariffs on agricultural and dairy products, a move aimed at shielding millions of small farmers and respecting religious and cultural sensitivities tied to US dairy production methods.

Modi has drawn his own “red line,” pledging never to “compromise on the interests of farmers, fishermen and dairy farmers,” even if it means, in his words, "I know I will have to pay a heavy price for it personally, and I am ready for it. India is ready for it."

The economic stakes are high.

The tariffs put some of India’s biggest export earners at risk, including textiles, gems and jewellery, and leather.

The trade-off is stark.

India saved just $3.8 billion in the year to March from discounted Russian crude as price gaps narrowed, according to ratings agency ICRA. In the same year, it shipped about $87 billion worth of goods to the US.

ICRA, cited by Bloomberg, has warned that any gains from cheaper oil would be dwarfed by the potential loss of access to the US market.

Also Read: Trump’s punitive India tariff spoils PM Modi’s Russian oil math

“If you look at the size of India’s trade with the US, and look at how much savings India gets from buying Russia crude, it’s pretty clear what India would do,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore.

“Are you going to risk up to $87 billion worth of exports to the US in order to save a few billion from oil discounts?”

If India does stand firm, refiners in the country could be forced to find new buyers for their petroleum products, losing access to key customers in the US and Europe.

Talking to ET, an industry official put it bluntly: “Russian crude oil was cheap for Indian refiners. If we have to go back to importing from the Middle East, the gross refining margin… may go down.”

The financial hit could be steep. As per PTI, analysts estimate that moving away from Russian crude could push up India’s annual oil import bill by $9–11 billion.

As per The Economist, most Indian refineries -- aside from those directly linked to Rosneft, the Russian oil major -- source the bulk of their crude from non-Russian suppliers.

Even when Russian oil is in the mix, they can plausibly claim the final product isn’t primarily Russian. That makes enforcement, especially of EU bans, tricky and inconsistent.

Dedollarisation and the BRICS bloc

The US actions against India are part of a wider "weaponised tariff strategy," as some analysts have described it, that is less about fixing trade imbalances and more about enforcing a political agenda.

This is evident in the administration's stance on the BRICS bloc and the movement toward dedollarisation.

A central factor is the administration’s hostility toward BRICS, the bloc comprising Brazil, Russia, India, China, and South Africa, and its push for dedollarisation. President Donald Trump has long been an outspoken critic, labelling BRICS “anti the United States.”

His position was clear even before he took office for a second term.

On November 30 last year, Trump warned that the US would require BRICS members to pledge they would not create a common BRICS currency or support any alternative meant to supplant the dollar.

Failure to comply, he said, could invite tariffs of up to 100 percent. “Nor back any other currency to replace the mighty US dollar,” he declared, framing the dollar’s dominance as non-negotiable.

He views their efforts to move away from the US dollar in international trade as a direct threat to American economic dominance.

While India has been a pragmatic proponent of using local currencies in bilateral trade, it has also stated, as reported by The Hindu, that it has no intention of undermining the dollar.

“We've always said that India has never been for de-dollarisation, right now there is no proposal to have a BRICS currency. The BRICS do discuss financial transactions...US is our largest trade partner, we have no interest in weakening the dollar at all," Dr Jaishankar had said back in February.

Also Read: India's Atmanirbharta plans may take a hit with Trump's 50% tariff move: Moody's

The tariffs on India and Brazil are seen by many as a warning to other nations contemplating similar moves.

Adding to India's concerns, Trump's recent engagement with Pakistan has raised red flags in New Delhi. By promising to jointly explore oil reserves with Pakistan and giving it a more favorable tariff rate, at 19%, the US is seen as using India's regional rival to exert pressure.

This, coupled with taunts that India could buy oil from its "arch enemy" Pakistan, has been seen as a deliberate provocation.

A "slow-motion catastrophe"

The punitive tariffs threaten to unravel a quarter-century of painstakingly built trust and cooperation between the two nations.

As Ashley Tellis, a senior fellow at the Carnegie Endowment for International Peace, told Reuters: "India is now in a trap: because of Trump's pressure, Modi will reduce India's oil purchases from Russia, but he cannot publicly admit to doing so for fear of looking like he's surrendering to Trump's blackmail."

Tellis described the situation as a "needless crisis that unravels a quarter century of hard-won gains with India."

Evan Feigenbaum, a former senior State Department official, echoed this sentiment, warning that the relationship is at risk of becoming a "football in American domestic politics."

Also Read: India to fast-track domestic reforms amid rising US tariff pressure

He highlighted that issues related to India, such as H-1B visas and technology sharing, are among the "most partisan and explosive in Washington."

Feigenbaum has called the current situation a "slow-motion catastrophe" and noted that the core understandings that once anchored the alliance are now at serious risk.

The irony, as noted by observers, is that after decades of bipartisan effort to strengthen the partnership, relations are now being "dismantled" by the very forces of domestic politics that both sides had worked so hard to overcome.

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