US tariffs on India may linger even if there is a deal in Alaska

On 6 August, US President Donald Trump issued an executive order imposing an additional 25% tariff on India for buying Russia oil.

The White House said Russia’s actions in Ukraine “pose an ongoing threat to US national security and foreign policy,” and argued that India’s purchases “undermine US efforts to counter Russia’s activities in Ukraine.”

The announcement raises obvious questions.

Why is Trump irritated with India?

First, it is for the first time that we are told Russia’s actions in Ukraine “pose an ongoing threat to US national security and foreign policy.”

Trump had long framed Ukraine as a European problem.

The timing of the announcement is also puzzling.

It followed US special envoy Steve Witkoff’s talks with Russian President Vladimir Putin and ahead of a planned Trump-Putin meeting in Alaska on Friday, 15 August, billed as a step toward ending the war.

What was the hurry in raising the tariff on India?

If Indian oil imports truly erode US leverage, why act only now?

And why single out India when China buys more Russian oil?

Beijing has been given 90 days to reach a trade deal, while India gets tariffs.

Are we to conclude that China is not undermining US efforts to counter Russia’s activities in Ukraine?

Asked whether other buyers of Russian oil would face the same penalty, Trump quipped that he had asked his secretary of commerce to identify them.

The signal is clear. China is being handled differently; India is being punished.

Why?

Did India fail to deal with Trump in a sensitive way?

Part of this may be personal.

Trump practices intensely personal diplomacy and appears aggrieved that Prime Minister Narendra Modi did not credit him for the 10 May India-Pakistan ceasefire.

Trump announced the ceasefire first and likely saw it as a credential for the Nobel Peace Prize.

His claim to have “mediated” is inaccurate.

Mediation requires a request from both sides, and India made no such request.

Yet New Delhi could have handled the episode with more diplomatic agility.

Once Pakistan’s director general of military operations sought a ceasefire, the ministry of external affairs could have stated that India had taken note and was considering it, which would have pre-
empted Trump’s boast of being first.

A cooler response to his mediation claim would have helped too: a simple clarification that no mediation was sought, paired with thanks for any counsel Washington offered Islamabad.

Further, taking into account Trump’s sensitivities, a brief call from Modi acknowledging that advice would have cost India nothing and would have soothed sensitivities without diminishing the success of Operation Sindoor.

Trump treats China differently

China imports a larger share of Russian oil than India yet faces no equivalent tariff.

Why is Trump going soft on China?

The US badly needs Chinese rare earths and is courting a summit with President Xi Jinping to clinch a deal.

That strategic calculus appears to spare Beijing what New Delhi now faces.

But India’s reaction mixed incomprehension with anger and resolve.

The ministry of external affairs called the decision “unfair, unjustified, and unreasonable.”

Modi vowed to protect the interests of “farmers, fishermen and dairy farmers.”

Defense minister Rajnath Singh postponed his US visit, a signal that US arms purchases could be paused if necessary.

Opposition voices urged reciprocal duties on US goods, a response that would likely invite a sharper counterpunch.

It is obvious that Washington’s capacity to inflict economic pain is greater than India’s.

The impact on India

The 25% surcharge is due to take effect by 27 August, but markets have already moved.

Importers will rethink orders. US buyers of Indian gems and jewelry, who typically place Christmas-season orders now, will hesitate.

Government estimates presented in Parliament on Monday, 11 August, showed that about 55% of the value of India’s merchandise exports to the US could be hit.

In 2024, India shipped $87.3 billion of goods to the US, generating a $45.8 billion surplus.

Economists are cutting growth forecasts; one estimate from the Madras School of Economics pegs the hit at 0.6 percentage points from a 6.5% baseline.

The broader risk is collateral damage to a relationship with a mercurial president.

What should India do?

Modi should use his next trip to New York in September for the UN General Assembly to meet Trump and defuse the situation.

India’s diplomats can easily figure out an appropriate set of words that respect facts and soothe pride.

New Delhi should also plan for the tariff to persist even if a Ukraine ceasefire emerges.

Trump is a hard bargainer; limited agricultural access may become the price of relief.

Beyond immediate tactics, India also needs to study Trump’s mindset.

A multidisciplinary team comprising psychologists, psychiatrists, international relations scholars, former ambassadors, and members of the US diaspora map his incentives, triggers, fears,
and ambitions.

The work should be discreet.

Understanding the man will help manage better relations with him.