India vs. Trump: The 21-day tariff showdown

Satyabrat Borah

(satyabratborah12@gmail.com)

In August 2025, India found itself at a critical juncture in its relationship with the United States, facing what has been dubbed the ‘21-day Trump trap’. This phrase, coined by diplomat Syed Akbaruddin in a media article, encapsulates the precarious situation India confronts due to U.S. President Donald Trump’s executive order imposing an additional 25% tariff on Indian goods, bringing the total tariff to a staggering 50% when combined with existing levies. Set to take effect on August 27, 2025, this move targets India’s continued purchase of Russian oil amid the ongoing Ukraine conflict, signalling a dramatic shift in U.S.-India relations. The tariffs, described as a fusion of trade, diplomacy, and global strategy, pose significant economic and geopolitical challenges for India, threatening its $86.5 billion export market to the U.S. and straining a partnership that has been carefully nurtured over decades. As India navigates this 21-day window, it must balance its strategic autonomy, economic imperatives, and diplomatic relations to avoid long-term fallout while seizing opportunities to reshape its global standing.

The roots of this crisis lie in India’s energy and foreign policy choices, particularly its increased reliance on Russian oil. Since the onset of Russia’s invasion of Ukraine in 2022, India’s oil imports from Russia have surged from a mere 3% in 2021 to approximately 35-40% in 2025, driven by the need to secure affordable energy for its 1.4 billion people. This pragmatic decision, rooted in market dynamics and energy security, has placed India in the crosshairs of Trump’s aggressive trade policy, which seeks to pressure Moscow by targeting countries purchasing Russian oil. The executive order, signed on August 6, 2025, cites the International Emergency Economic Powers Act and builds on previous measures prohibiting U.S. imports of Russian oil, framing India’s actions as undermining Western sanctions and fuelling Russia’s war machine. The additional 25% tariff, effective in 21 days, is a punitive measure aimed at forcing India to realign its energy imports, with Trump explicitly ruling out trade negotiations until the issue is resolved.

The economic implications of the tariffs are profound. The U.S. is India’s largest export market, with $86.5 billion in goods exported in 2024, including textiles, jewellery, pharmaceuticals, and electronics. The 50% tariff, the highest imposed on any U.S. trading partner alongside Brazil, threatens to disrupt these sectors, particularly labour-intensive industries like textiles and gems, which employ millions. Economists estimate that a 25% tariff could reduce India’s GDP growth by 0.3 percentage points, with further penalties exacerbating the impact. The Ministry of Commerce and Industry has projected that 10% of India’s exports in the July-to-September period could be affected, prompting urgent discussions on export promotion measures, including a potential increase in the 22.5 billion rupee ($329 million) budget allocated to support exporters. Sectors like pharmaceuticals and smartphones, currently exempt, may face future risks if exemptions are lifted, adding to the uncertainty.

Beyond economics, the tariffs represent a geopolitical challenge, testing India’s policy of strategic autonomy. For decades, India has maintained a delicate balance in its foreign relations, fostering ties with both Western powers and traditional partners like Russia. The Trump administration’s approach, described by experts as a blend of tariffs and sanctions, seeks to force India into a binary choice: align with U.S. interests or face economic consequences. This pressure is compounded by Trump’s sharp rhetoric, labelling India’s economy “dead” and accusing it of “profiting from chaos” in Ukraine, a stark departure from the warmth displayed during Prime Minister Narendra Modi’s February 2025 visit to Washington, where the two leaders pledged to double bilateral trade to $500 billion by 2030. The sudden shift has left Indian officials reeling, with one anonymous official describing Trump’s language as a “verbal slap in the face”.

India’s response has been a mix of defiance and diplomacy. The Ministry of External Affairs has called the tariffs “unfair, unjustified, and unreasonable,” emphasizing that India’s oil imports are driven by market factors and the need to ensure energy security. Prime Minister Modi, in a speech on August 6, 2025, vowed not to compromise on the welfare of Indian farmers, dairy workers, and fishermen, signalling a firm stance against external pressure. Yet, behind the scenes, India is exploring damage control measures. The government is considering easing dairy market access for U.S. products, such as cheese and condensed milk, to placate Trump, a significant concession given India’s high tariffs and cultural sensitivities around dairy. Diplomatic efforts are also underway, with National Security Adviser Ajit Doval meeting Russian President Vladimir Putin in Moscow and External Affairs Minister Subrahmanyam Jaishankar planning a visit to Russia, while Modi prepares for a trip to China for the Shanghai Cooperation Organisation summit. These moves suggest a potential realignment, with India strengthening ties with BRICS nations to counterbalance U.S. pressure.

The 21-day window offers a narrow opportunity for negotiation, as Trump’s announcement signals openness to a deal before the tariffs take effect. However, India faces a diplomatic tightrope. Conceding to U.S. demands risks undermining its sovereignty and alienating domestic constituencies, particularly farmers, who are a key political base for Modi. Retaliation, on the other hand, could escalate tensions, further harming India’s economy, which is deeply intertwined with the U.S. market. Experts like Ajay Bisaria advocate for a “long game”, urging India to assert its energy needs while reassuring Washington of its strategic value in the Indo-Pacific. A U.S. delegation’s upcoming visit later in August provides a chance to negotiate a trade deal, potentially de-escalating the crisis.

The broader geopolitical context complicates India’s options. Trump’s policies have also strained relations by tilting toward Pakistan, with a recent oil exploration deal and claims of mediating a ceasefire in a May 2025 India-Pakistan conflict, which India rejected. This shift, coupled with Trump’s accusations that India is indifferent to Ukraine’s plight, has eroded trust, challenging the “comprehensive global strategic partnership” India has emphasized. Meanwhile, the unintended beneficiary may be China, as Indian exporters risk losing market share to Chinese and Vietnamese rivals if the tariffs persist. Modi’s planned visit to Beijing and discussions with Brazil’s President Luiz Inácio Lula da Silva indicate India’s intent to diversify partnerships, potentially through frameworks like the Regional Comprehensive Economic Partnership (RCEP).

The domestic political fallout adds another layer of complexity. Opposition leaders, including Jairam Ramesh of the Indian National Congress, have criticized Modi’s earlier camaraderie with Trump, calling the tariffs “economic blackmail”. Social media posts on X reflect public frustration, with users like @Nidhi lamenting the damage to U.S.-India ties and @Mumbaicha Don mocking Trump’s volte-face. Modi’s government must navigate these criticisms while addressing the economic shock, which could exacerbate existing challenges in an economy already grappling with inconsistent growth.

To escape the Trump trap, India must leverage its diplomatic agility and economic resilience. Strengthening ties with alternative markets like the EU and ASEAN, where bilateral trade with Europe stands at $70 billion, could reduce dependence on the U.S. Domestically, initiatives like the Production Linked Incentive (PLI) scheme, which attracted $8 billion in electronics manufacturing in 2024, position India to capitalise on the global shift away from China. However, addressing regulatory bottlenecks and labour reforms will be critical to sustaining this momentum. India could also explore increasing U.S. oil imports if priced competitively, as suggested by Akbaruddin, to placate Trump without fully abandoning Russian supplies.

The 21-day Trump trap is a test of India’s strategic foresight. The tariffs threaten not only economic stability but also the trust built over decades of U.S.-India partnership. By combining assertive diplomacy, economic diversification, and targeted concessions, India can navigate this crisis while preserving its autonomy. The coming weeks will determine whether India emerges stronger, forging new global alliances, or becomes ensnared in a trade war that undermines its aspirations. As the clock ticks toward August 27, India’s ability to balance pragmatism and principle will shape its future on the world stage.