Heramba Nath
(herambanath2222@gmail.com)
The unfolding dispute between India and the United States over punitive tariffs has quickly emerged as one of the defining political and economic events of our times. It is not simply a matter of figures in trade ledgers or percentages in tariff adjustments; it represents a profound test of the relationship between two democracies that have increasingly described one another as natural partners in the 21st century. The announcement from Washington that imports from India would face a steep fifty per cent tariff, in retaliation for New Delhi’s continued purchase of discounted Russian oil, has sent shockwaves across markets and diplomatic circles alike. Yet the meaning of this crisis goes far beyond immediate economic disruption. It touches upon the deeper contradictions between economics and security, autonomy and alignment, and partnership and pressure. In a world where globalisation and geopolitics have become inseparable, it raises profound questions about how nations define sovereignty.
The first visible tremors were financial. Within hours of the announcement, the Indian rupee slipped to record lows against the dollar. Stock markets tumbled, wiping out billions in investor wealth in a single day. Exporters of textiles, leather goods, gems and jewellery, machinery, and marine products—sectors directly hit by the tariff—expressed alarm over their ability to maintain access to the crucial American market. These industries collectively employ millions of Indian workers, particularly in small and medium-sized enterprises scattered across the country. For them, the crisis is not about strategy or diplomacy but about whether orders will dry up, whether jobs will be cut, and whether families will be able to meet their daily needs. The fallout from geopolitical decisions often lands most heavily on ordinary shoulders.
India’s official response was immediate and firm. The government denounced the tariffs as discriminatory and unfair, characterising them as a violation of the very free trade principles the United States routinely advocates on global platforms. Senior officials indicated that India would not be coerced into abandoning its energy strategy and that its imports of Russian oil were driven not by politics but by national interest. This crisis, New Delhi emphasised, is an opportunity to reassert the principle of strategic autonomy—a principle that has guided Indian foreign policy for decades. At the same time, the government quietly intensified efforts to diversify trade partnerships, strengthening bonds with Russia, China, West Asia, Africa, and Latin America. The unspoken message was clear: India has alternatives, and it will not be easily bullied.
The irony lies in the backdrop. Only months earlier, officials on both sides had been celebrating the growing closeness of the Indo-American relationship. Defence cooperation had reached unprecedented levels. Joint military exercises had become routine. The Quad—bringing together India, the United States, Japan, and Australia—was being projected as a major plank of Indo-Pacific stability. Political leaders had gone out of their way to project warmth, with large public spectacles showcasing the friendship between the two nations. To many observers, India and the United States seemed firmly on a path of convergence. And yet, beneath the surface, frictions simmered. Trade has always been one of the most difficult areas in this partnership. Washington has frequently accused New Delhi of protectionism, while India has accused the United States of using trade as a political weapon. Even before this escalation, disputes had arisen over agricultural imports, dairy restrictions, solar panel duties, and intellectual property rights. The new tariffs, therefore, are less a sudden rupture and more an intensification of long-standing fault lines.
The Russia factor has added an incendiary element. Since the Ukraine war erupted in 2022, Washington has sought to isolate Moscow through sweeping sanctions, rallying allies and partners to reduce dependence on Russian oil and gas. India, however, has charted its own course. Guided by long-standing ties with Russia—stretching from defence cooperation to energy—and by its own pressing need for affordable supplies, New Delhi dramatically increased imports of discounted Russian oil. This policy has been rational, ensuring that India’s energy needs are met at prices that prevent inflationary spirals. It has also allowed Indian refiners to supply affordable petroleum products to both domestic consumers and external markets. From an Indian perspective, the policy is pragmatic, necessary, and consistent with its tradition of maintaining autonomy in foreign affairs. For Washington, however, it has been a source of growing frustration, seen as undercutting its strategy of isolating Russia.
The tariff decision must therefore be read not simply as an economic move but as a geopolitical signal. By striking at India’s exports, the United States is attempting to raise the costs of divergence, reminding New Delhi that alignment has its benefits and defiance its penalties. It is a calculated gamble: a push strong enough to cause pain but not so strong as to rupture the broader relationship. Yet such calculations often misjudge the pride and resilience of nations. For India, to capitulate under pressure would be seen domestically and internationally as a betrayal of sovereignty. The political costs of appearing subservient to Washington could outweigh the economic costs of tariffs. This is the delicate balance India must now navigate.
The crisis also exposes the fragility of the so-called rules-based international order. Both nations routinely proclaim their commitment to multilateralism, yet the tariffs were imposed unilaterally, bypassing the World Trade Organisation. The WTO, once a central forum for dispute resolution, has been steadily weakened by years of neglect and the rise of unilateralism. When even the world’s largest democracies abandon multilateral mechanisms, what message does it send to smaller nations who rely on those very institutions for fairness? The erosion of international institutions is not merely an abstract problem; it deepens global uncertainty, leaving weaker economies exposed to the whims of the powerful.
The human dimension must not be ignored. In Surat, small diamond-cutting units fear losing American orders. In Tirupur, garment exporters worry about cancelled shipments. In Kerala’s fishing communities, marine exporters speak of uncertain futures. For workers in these sectors, geopolitics is not a distant concept but an immediate reality that threatens wages and livelihoods. On the other side, American consumers will face higher prices for everyday goods imported from India, from clothing to jewellery. This is the paradox of the global age: decisions taken in Washington and New Delhi ripple into the homes of workers and families thousands of miles away.
Historically, India and the United States have had a complex relationship shaped by mistrust as well as cooperation. During the Cold War, India leaned towards Moscow while Washington backed Islamabad. After 1991, economic liberalisation opened new avenues of engagement. The civil nuclear deal of 2005 was seen as a turning point, a moment when Washington recognised India as a responsible power deserving of special treatment. Yet disputes have repeatedly surfaced, particularly over trade and foreign policy independence. The tariff war of 2025 is best understood as part of this long trajectory: not a sudden collapse but another stress test in a relationship that has never been entirely smooth.
What complicates matters further is the broader state of the world. Globalisation is under retreat. Protectionism is on the rise. Climate crises, pandemics, and technological disruptions are reshaping economies. The scramble for critical minerals and semiconductor dominance adds new dimensions to rivalry. In this environment, economic disputes are rarely only about economics; they are also about influence, alignment, and power. The U.S.–India escalation is emblematic of this new era, where every tariff carries geopolitical meaning.
For India, the path forward requires both resilience and creativity. Diversifying export markets is urgent. Strengthening ties with Africa, Latin America, and Southeast Asia can provide buffers against over-dependence on any single market. At home, boosting competitiveness through innovation, infrastructure, and skilling can help industries withstand external shocks. Diplomatically, India must continue to assert its strategic autonomy while demonstrating that partnership with it brings value beyond alignment on single issues. For the United States, the challenge is to recognise that pressuring India risks undermining the very partnership it wishes to strengthen. True influence in a multipolar world will flow not from coercion but from respect and cooperation. The tariff escalation is, in the end, not only about trade figures but also about principles. It tests whether two democracies can accommodate differences without damaging their partnership. It asks whether economic coercion can truly work in a world where nations have multiple options. It forces reflection on whether alliances in the 21st century must mean conformity or whether they can allow space for autonomy.
The answer to these questions will shape not only U.S.–India relations but also the broader global order. If this crisis can be resolved with wisdom, restraint, and respect, it will reaffirm the resilience of the partnership. If it descends into bitterness, it may mark the beginning of estrangement at a time when both nations can ill afford division. For now, what remains clear is that the tariff war has become a mirror of our times: a reminder that in the tangled web of global politics, the struggle for autonomy and respect continues to define the choices of nations.