Workers assemble circuit boards at Zetwerk Electronics in Bengaluru, India. As US President Donald Trump pushes his trade and Russia agendas, the US relationship with India, a key partner in Asia, risks becoming collateral damage. Photo / Saumya Khandelwal, The New York Times
Workers assemble circuit boards at Zetwerk Electronics in Bengaluru, India. As US President Donald Trump pushes his trade and Russia agendas, the US relationship with India, a key partner in Asia, risks becoming collateral damage. Photo / Saumya Khandelwal, The New York Times
Analysis by Anupreeta Das
United States President Donald Trump has staked enormous political capital on being the one to end the war in Ukraine, even asserting that he could do so “in 24 hours”.
In perhaps his biggest gamble yet to achieve that goal, he has pledged to punish India with tariffs of50% for buying Russian oil.
At stake is the relationship between the United States and an increasingly important strategic partner in Asia.
India, the world’s most populous democracy, and the US, its most powerful one, have an unusual relationship.
They are friendly but not close, brought together by mutual interests and shared values, especially in recent decades.
This week, Trump seemed ready to ditch that relationship.
He doubled already hefty tariffs on Indian exports to the US for its steadfast refusal to stop buying oil from Russia, in an effort to pressure Russia to end the war.
Trump has accused India of helping Russia finance its war on Ukraine through oil purchases; India has said it needs cheap oil to meet the energy needs of its fast-growing economy.
India called the additional tariffs “unfair, unjustified, and unreasonable”, pointing out that it was being punished for doing something — buying Russian oil at a discounted price — that other nations have done, although it didn’t mention names.
China is the largest buyer of Russian oil, and Turkey has also deepened its energy links with Russia since the start of the war in Ukraine, without incurring similar penalties.
Analysts said Trump’s pressure tactics could damage the long-standing ties between India and the US.
“We are better off together than apart,” said Atul Keshap, a retired US diplomat and president of the US-India Business Council.
“The partnership forged by our elected leaders over the past 25 years is worth preserving and has achieved considerable mutual prosperity and advanced our shared strategic interests.”
It’s difficult to quantify what exactly America would lose if its relationship with India cools.
India is a valuable strategic partner for the US, acting as a counterweight to China.
It is also important to many American companies, including Apple, which has shifted some manufacturing of its products to India from China.
Ajay Srivastava, a former trade official at the Global Trade Research Initiative, a New Delhi-based think-tank, said the US action “will push India to reconsider its strategic alignment, deepening ties with Russia, China, and many other countries”.
India and the US, with Japan and Australia, are part of a diplomatic partnership called the Quad, set up largely to counter China’s growing influence in the Indo-Pacific region.
India is planning to host the Quad Leaders’ Summit later this year. Trump was expected to attend, although it’s now unclear if he will.
For India, the costs of a damaged relationship may prove to be higher.
Trump’s move puts Prime Minister Narendra Modi in a bind.
Russia is the source of 45% of its oil imports. If India stops buying Russian oil, accepting higher prices for consumers and domestic manufacturing, it would be politically damaging for Modi’s Government.
If it ignores Trump’s threat and continues buying Russian oil, the hit to India’s economy will be far costlier.
The higher tariffs could cut India’s more than US$86 billion in exports to the US by half, according to the Global Trade Research Initiative, an Indian research group.
The US is India’s biggest trading partner, and exports account for nearly 20% of India’s economy. India ranks only 10th among American trade partners in goods.
India has also come to value American backing for its bid to be recognised as a global superpower. Modi has touted his relationship with Trump, courting the US President during his first term in office and calling him a “true friend”.
But that friendship, as many American allies have learned, may mean little when Trump’s own priorities are at stake.
US President Donald Trump is open to meeting Russian counterpart Vladimir Putin and Ukraine's President Volodymyr Zelenskyy, the White House said yesterday. Photo / Olga Maltseva, Brendan Smialowski, Frederick Florin / AFP
In recent weeks, Trump announced that he had struck deals with Japan, South Korea and the European Union, but even after months of negotiation, India had not reached an agreement.
India was reluctant to make concessions on politically sensitive sectors like dairy and agriculture.
India also publicly denied Trump’s repeated claims that he helped broker a ceasefire between India and Pakistan after a brief, four-day conflict between the two neighbours in May.
India has maintained that the ceasefire was negotiated bilaterally with Pakistan, and Indian leaders bristled at Trump’s willingness to insert himself into that bitter rivalry.
It is not yet clear whether the punitive tariffs Trump has threatened will ever take effect.
In the executive order he issued, Trump said the tariffs would be implemented within a month, but he could modify the order if circumstances changed.
The order included a provision that the US would look at other countries’ purchases of Russian oil as well.
So far, there is no indication that Trump intends to take a similar approach to China.
Chinese and US officials are in the middle of sensitive negotiations about potential trade agreements after an initial round of retaliatory tariffs threatened to destabilise the global economy.
With his tariff moves against India, Trump is keeping his eye on big strategic goals — a deal with China and keeping the pressure on Moscow before a potential meeting with the leaders of Russia and Ukraine, which he disclosed yesterday.
Far from being “a dead economy”, as Trump called it, India is the fastest-growing large economy in the world.
But its place on the President’s list of priorities may be much less certain.
