If you are close to Pakistan’s army, then you are not a friend. And if you want a deal that could harm India’s farmers, then you are far from an ideal trade partner.
That’s the coalescing view among Indians about U.S. President Donald Trump as his government engages with Pakistan and threatens India with especially high tariffs.
In June, when Trump hosted Pakistan’s army chief, Syed Asim Munir, for lunch at the White House, many Indians were livid. They see Munir as a supporter of anti-India terrorist groups as well as someone who, according to reporting published this week in Indian newspaper ThePrint, threatened to nuke India in comments made while he was in the United States.
In addition to cozying up to India’s archenemy, Trump has threatened New Delhi with tariffs as high as 50 percent unless India stops purchasing Russian oil and grants U.S. companies broader access to India’s agricultural sector. Roughly 44 percent of Indians are employed in agriculture.
“India will never compromise on the interests of its farmers, livestock rearers, and fisherfolk,” Indian Prime Minister Narendra Modi said in a speech following Trump’s announcement.
Whichever path India chooses, it stands to incur financial losses.
India exported goods worth $87 billion to the United States last year, and if the tariffs come into effect, then India’s GDP could take a hit of 0.2 percent. Trump’s prohibitive tariffs may render specific sectors, such as Indian textiles, uncompetitive in the United States.
If New Delhi decides to stop purchasing Russian oil, then the profit margin of Indian oil refineries will drop. They have been buying Russian crude at a discount of about $5 less per barrel than non-Russian crude. The biggest hole, however, will be made in the pockets of the end consumer, who may have to pay more cash for fuel. Some analysts say that cutting off Russian supplies could cost India $11 billion.
So far, India has refused to abandon its farmers or to stop buying fuel from Russia. Instead, New Delhi extended an invitation to Russian President Vladimir Putin to visit the country at his earliest convenience.
But India’s stern public posturing seems to belie the toughest foreign-policy predicament that India has faced in years: It must disrupt ties with a historical ally if it wants to prevent the wrath of a fellow democracy that it sees as its most important global partner.
Experts and diplomats whom Foreign Policy spoke with said that India’s strategy will ultimately depend on New Delhi’s assessment of Trump’s underlying motivations.
According to a former Indian diplomat who spoke to Foreign Policy on the condition of anonymity, India and the United States were close to a deal when Trump announced the “secondary tariffs” over Russian oil.
“We were so close to a trade deal with the U.S., but this Russian oil issue didn’t come up,” he said.
Furthermore, the fact that the United States has left out China from secondary tariffs, even though it buys more Russian oil, has made Indians wonder about Trump’s real agenda.
“Has the U.S. sanctioned China, which also buys Russian oil? In fact, it has granted a further 90-day extension of the deadline,” the former diplomat said, referring to the temporary pause on tariffs that the two countries have threatened to impose on each other . “What does this mean? Is the U.S. president interested in stopping purchases of Russian oil, or is he using India as leverage in bargaining with Putin?”
India is veering toward the assessment that the threat against it is essentially a tactic to get Putin to agree to a cease-fire in Ukraine.
“Putin has asked to meet him,” Syed Akbaruddin, India’s former permanent representative to the United Nations and currently the dean of Kautilya School of Public Policy, Hyderabad, told FP over the phone. “If something comes out of this meeting, the rationale for the 25 percent collapses. Then we have half a problem.”
He said the best course of action for India is to stay quiet—that is, refrain from counter-tariffs—until Putin and Trump meet in Alaska on Aug. 15.
Indian analysts and diplomats say that if India must, it will reduce purchase of Russian oil and diversify over the next couple of months.
“Diversification of oil sources, that’s not a big problem for India. Right now, we are buying oil from 40 countries, in different proportions. We could slowly get more, say from Mozambique, Saudi Arabia, even the U.S.,” the diplomat said.
Sumit Ritolia—the lead research analyst at Kpler, a company that gathers intelligence on commodities trade—said India could revert to buying more oil from the Middle East, but it would cost more. He added that diversification won’t happen in a few days or weeks but instead “could take up to six months.”
India’s bigger concern is a concomitant spike in the cost of fuel per barrel. It currently buys nearly 2 million barrels a day from Russia, between 35 and 40 percent of its total needs last year. If India were to stop buying Russian oil, it could cause a supply crunch that may push up oil prices globally.
“That will lead to a massive outflow of foreign exchange for us,” said the Indian diplomat who chose to stay anonymoust. India is the world’s third-largest oil importer. “It would hurt not just us, but everyone. At $100 for a barrel, does Trump want that?”
Some Indian economists believe that India should worry more about the spiraling cost of fuel rather than the United States’ tariffs. “If you look at the four major industries—mobile phones, pharmaceuticals, gems, and garments—these make up 40 percent-45 percent of India’s total exports to the United States. But the first two are exempted from higher tariffs, and Indians in America will continue to buy jewels and gems,” said Biswajit Dhar, an Indian economist. “The garment sector will suffer. That’s a labor-intensive sector, and jobs could be lost.”
But Trump’s relatively lower tariffs against other major garment manufacturers have already outpriced Indian exporters whether or not New Delhi blocks Russian crude. India had been negotiating for a 15 percent tariff, which would have left it competitive against Bangladesh’s and Vietnam’s rates of 20 percent each.
The Indian diplomat added that tariffs would hurt traders along the supply chain and emphasized that not all components of goods exported to the United States are manufactured in India—and so the loss from higher tariffs would be split along the supply chain.
Indian confidence in taking on Trump and protecting its sovereignty also emanates from its belief that it has a large domestic market and other foreign suitors. The country recently signed a trade deal with the United Kingdom and is negotiating one with the European Union.
Sangeeta Godbole, a former officer with the Indian Revenue Service (IRS) and former trade negotiator, told Foreign Policy that she had never been so optimistic about an EU-India trade agreement. “If the EU were to offer a few good carrots, the deal could be clinched,” she said.
An EU spokesperson didn’t comment on questions regarding U.S.-India tensions but told Foreign Policy that the talks to secure a free trade agreement were on track.
Even as Indians debate which policy to adopt, they are hoping that they can offer Trump more trade and win him over. Earlier this year, New Delhi assured Washington that it would increase its imports of U.S. energy from $15 billion to $25 billion and expand total trade from $200 billion to $500 billion by the end of this decade. India has already started to deliver on its promise and upped U.S. energy imports by more than 50 percent in the first half of the year.
Kpler reported that amid recent tensions, Indian refiners dropped imports of Russian fuel by more than 500,000 barrels per day and, in contrast, increased imports of U.S. crude. “The trend suggests a strategic realignment in India’s energy sourcing, with refiners increasingly favouring US barrels amid uncertainty over sanctions and tariffs,” the firm posted on X.
India has also drastically reduced defense purchases from Russia over the years while increasing procurement from France, Israel, and the United States.
India’s message is that it will try to do everything that it can to assuage Trump’s concerns over the two countries’ trade deficit—of more than $45 billion—and buy more energy and more weapons, but also that it cannot allow the United States to force its hand and make decisions that are not in its national interest.
Some Indians and Americans who have painstakingly built the relationship over decades suggest a different approach: catering to Trump’s vanity.
Asha Jadeja, the biggest Indian American donor to the Republican Party, advised Modi to call and placate Trump. “This is not about tariffs or buying Russian oil; it’s something beyond that,” she told the South Asian Herald. Jadeja also said India should have thanked Trump for mediating a cease-fire with Pakistan even if the claims were “not true.”
Onstage in The Hague this June, as Trump addressed the media and celebrated Europe’s assurance of spending 5 percent of their national GDPs on defense, he claimed that his biggest victory in office thus far had been securing a cease-fire between India and Pakistan. But India has repeatedly denied this claim.
Experts say that if tensions between India and the United States escalate, China stands to benefit. The future of the Quadrilateral Security Dialogue—an alliance between the United States, India, Japan, and Australia that was built to contain China, is now under question as allies now second-guess ties with Washington.
Trump may have even eased tensions between New Delhi and Beijing, giving China a win while upsetting its key ally in the Indo-Pacific region.
Modi has decided to travel for the Shanghai Cooperation Organization summit for the first time in seven years, while China sympathized with India against Trump. “Give the bully an inch, he will take a mile,” the Chinese envoy to India wrote on X.