Spike in US tariffs may push India to realign with Russia, China

US President Donald Trump’s decision to slap an additional 25% tariff on most Indian goods—bringing total US duties to 50%—could prompt India to rethink its strategic alignments and draw closer to Russia, China, and others as it confronts a new phase of geopolitical and economic uncertainty, analysts said.

New Delhi-based think tank Global Trade Research Initiative (GTRI) warned in a report that the tariff escalation could significantly disrupt Indian exports and strain bilateral trade ties, while also nudging New Delhi toward alternate global alliances.

“This is one of the highest tariff rates the US has ever imposed on a trading partner,” the report said.

The move, widely seen as a response to India’s continued imports of Russian oil, comes as Washington seeks to tighten pressure on Moscow over its invasion of Ukraine.

The additional tariffs are set to take effect from 27 August, 21 days after the announcement.

GTRI estimates the hike will sharply raise costs for Indian exporters across key sectors including organic chemicals, textiles, apparel, carpets, jewelry, steel, and machinery—many of which will now face effective tariffs of 50% or more.

Ajay Srivastava, founder of GTRI, flagged the inconsistency in Washington’s approach.

“The US has also overlooked its allies’ trade with Russia: the EU imported $39.1 billion of Russian goods last year, including $25.2 billion in oil, while the US itself purchased $3.3 billion in strategic materials from Russia,” he said.

China, which bought $62.6 billion worth of Russian oil in 2024—more than India’s $52.7 billion—has not been penalized.

“This reflects the US’s reluctance to target Beijing, given its dominant position in supplying critical materials like gallium, germanium, rare earths, and graphite,” Srivastava added.

GTRI said the hardest hit will be India’s apparel and textile exports, which currently enjoy strong market share in the US.

Tariffs on these categories could rise from 10–14% to as high as 60%, dealing a serious blow to competitiveness.

Shrimp exports, another key segment, will now face a flat 50% duty.

Meanwhile, sectors like pharmaceuticals and smartphones have been spared additional tariffs, likely due to strategic considerations.

The Indian government condemned the move as “extremely unfortunate.”

In a statement, the Ministry of External Affairs said, “India’s oil imports are based on market factors and aimed at ensuring energy security for 1.4 billion people. It is therefore extremely unfortunate that the US should impose additional tariffs for actions that several other countries are also taking in their own national interest. These actions are unfair, unjustified and unreasonable. India will take all necessary steps to protect its national interests.”

Bilateral trade between the US and India stood at $87 billion in 2024, but officials warn that the new tariff regime could slash Indian exports to the US by 40–50%.

GTRI said industries such as footwear, jewellery, chemicals, and engineering goods now risk losing ground in one of India’s most important export markets.

Trade talks between the two countries had already stalled over US demands for wider access to Indian agricultural and dairy markets, and differences on India’s energy policy.

While warning of deep disruptions, GTRI advised restraint.

India, it said, should not exit its oil deals with Russia unless it makes economic sense to do so. It also urged New Delhi to avoid immediate retaliation and instead “wait at least six months before engaging in fresh trade negotiations, which are unlikely to succeed under the current climate of threats and mistrust.”