The second term of Donald Trump as US President is reshaping the world trade with his hardcore tariff policy. Tariffs are levies on imported good and Trump is wielding them as a tool to drive countries into new trade agreements.
Some nations have signed agreements with the US, but others, like India, have not. India is subjected to a tariff of 50% on its products entering the US, the highest in South Asia. This action has brought strain relations between the US and India, who are close allies that have signed some key agreements, notably LEMOA, BECA and COMCASA as a military and strategic partners.
The buying of Russian oil by India is one of the reasons behind the US tariffs on India, as the U.S. views this as indirect support to Russia in the ongoing war with Ukraine that America does not want to see Russia win. First, Trump has imposed a 25 percent tariff on India on the purchase of Russian oil, and this was increased to 50 percent to put more pressure.
Nevertheless, India has responded to this with the import of more Russian Oil. Latest statistics show that India has purchased 2 million barrels of oil per day in August 2025, compared to 1.6 million in July. Russia also offered 5 percent discount on its oil, making the deal even more attractive for India. This indicates that India is prioritizing its own energy requirement over the demands of the US, and this presents a dilemma to the Trump strategy.
Read More: US–India Relations Under Strain: Tariffs and Strategic Autonomy
The other factor that led to the tariffs is the rapidly growing economy of India. India is projected by experts to surpass the US to become the second-largest economy in the world, by 2075, after China. This may threaten the U.S. economic dominance. Hence, Trump is applying tariffs to slow down the economic growth of India. Through taxation of Indian products such as textiles and medicines, he would be hoping to undermine India’s status in international markets.
In future, India may adopt the Chinese policy of depending less on the US trade and diversifying its trade with Asia and Africa. To the neighboring nations, such as Pakistan, it will imply a weaker India in the region, yet this also carries the threat of instability in the face of trade wrangles spilling over to security matters.
This tariff tension has another aspect as well. India and Pakistan engaged in a nuclear-nearing 4-day war in May 2025. Trump says that because of his threats of tariff both countries agreed to ceasefire which prevented the region from plunging into nuclear disaster. Indian Prime Minister Narendra Modi however, refutes this by claiming that the ceasefire was the joint decision of both India and Pakistan and was achieved without the pressure of the US. This has caused bad blood between Trump-Modi, creating difficulty in reaching a consensus on tariff issue.
Read More: The American Dream and Soft Power
The tariff plan by Trump is not only a trade policy, but a method of remaking the world relations. He wants to dictate the moves of India, be it oil buying, or even economic development by seeking to dominate India. However, the insubordination of India indicates that emerging superpowers are less eager to obey the instructions of the US.
Discounting oil to India by Russia is an indicator that other nations are moving to provide their own gap fillers to the US policies. For a country like Pakistan, this gives them an opportunity to forge a relationship with nations like Russia to promote its geo-economics goals. Meanwhile, it increases the danger of new conflicts in case trade wars are aggravated.
To sum up, the strategy of tariff by Trump is a high stakes game. It tries to safeguard the US interests but costs it the major partners such as India. The world witnesses the extent of the economic strength of America as India counters act by purchasing more Russian oil and finding alternative markets. In the case of South Asia, it is to navigate this new reality, economic, security and diplomacy to stay on the right side of trade and stay stable. The world is waiting to know whether the Trump’s tariff gambit will reshape the world trade, or they will only continue to divide.
*The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of TDI.
Musavir Hameed
Musavir Hameed is currently serving as Research Officer at Balochistan Think Tank Network, Quetta and can be reached at musavirkhan88@gmail.com
