Trump’s latest steep tariff on India and Doval's Russia visit: What's brewing?

In a heated turn of events, US President Donald Trump has issued a 24-hour warning to India, threatening to impose steep additional tariffs. The warning comes amid accusations that India’s Russian oil purchases are indirectly funding the Ukraine war. The developments were the focus of a Capital Beat panel discussion on The Federal featuring Business Editor Prasanna Mohanty, and international affairs expert Aftab Kamal Pasha.

India seen as a soft target for tariffs

Trump’s strategy of using tariffs as a central tool of foreign policy is not new. From the outset of his presidency, he identified India as a major trade offender due to its high tariffs on American goods and a significant trade surplus. The panel noted that India’s muted responses in past engagements may have emboldened Trump’s administration.

Also read: India gives US stern answer, but can do little to ward off Trump’s antics

According to Prof. Pasha, while Trump had stepped back in tariff disputes with countries like Canada, Mexico, and Japan, he remained consistent in his pressure on India. India’s initial approach, including large-scale US oil and agricultural imports, appeared to give Trump the impression of leverage. However, subsequent bureaucratic pushback caused friction.

India’s continued purchase of discounted Russian oil, peaking at 40 per cent of national requirements, further drew US criticism. Allegations emerged that India was re-exporting refined Russian oil products at high margins, especially from the Jamnagar refinery, to Western markets.

Delayed Indian pushback fuels pressure

Prof. Pasha argued that the Indian government’s slow and cautious approach was perceived in Washington as weakness. The absence of a strong early rebuttal encouraged the Trump administration to expand pressure not only on oil imports but also on tariffs and immigration issues.

Also read: US rejected India's request for talks on steel tariffs: Minister

External Affairs Ministry spokesperson Randhir Jaiswal’s Monday statement calling the US threats “unjustified and unreasonable” marked a shift. However, the panel observed that such statements should have been made earlier in the year, particularly when pressure on oil purchases began mounting.

National Security Advisor (NSA) Ajit Doval’s Moscow visit, coinciding with Trump’s threat, is seen as a strategic signal. Prof. Pasha suggested that this visit aims to repair India-Russia ties, strengthen BRICS cooperation, and maintain access to Russian weapon systems amid rising China-Pakistan military collaboration.

India's message to Trump

Pictures of Doval meeting Russian President Vladimir Putin were widely circulated, underscoring India's strategic balancing. Prof. Pasha said this visit signalled that India would not be coerced into abandoning long-standing defence and energy ties with Russia.

In his view, the US misread India’s silence and underestimated its diplomatic options. The trip to Moscow, along with a recent visit to Beijing by External Affairs Minister S. Jaishankar, is being interpreted as India’s assertion of its foreign policy autonomy.

"These high-profile visits to Beijing and Moscow are a clear message to the Trump administration that you cannot run relations based on threats and blackmail," said Prof. Pasha.

India braces for potential economic fallout

Mohanty detailed the possible economic consequences of Trump’s tariff escalation. A 25 per cent tariff already places India at a disadvantage compared to regional competitors such as Bangladesh, Pakistan, and Vietnam, which face duties of around 20 per cent or less.

Higher tariffs on Indian exports like electronics (23 per cent), auto (24 per cent), pharma (25 per cent), gems (22 per cent), and textiles (16 per cent) are already straining competitiveness. India’s exports to the US stood at $119 billion in FY24, about 3.3 per cent of its GDP.

Beyond direct export losses, Mohanty warned of broader macroeconomic risks: increased oil import bills due to loss of Russian supply, spooked stock markets, rupee depreciation, falling FDI, and the potential need to cut capital expenditure to fund relief packages.

Job losses and inflation

The panel highlighted that any shift from Russian oil to more expensive alternatives could raise fuel prices across the board — petrol, diesel, and LPG. Mohanty stressed that this would directly impact inflation, reducing consumer purchasing power.

Labour-intensive export sectors such as gems, jewellery, and textiles are also at risk. Tariff hikes may lead to large-scale job losses, wage cuts, and diminished demand in the domestic economy.

"There would be an impact on wages, jobs, and growth," said Mohanty, who cautioned that the cascading effects of tariffs could drag GDP growth down by up to 40 basis points.

Indo-US ties tested, but resilience remains

Despite mounting tensions, Prof. Pasha remained cautiously optimistic about the future of Indo-US relations. He noted that India had shown substantial flexibility in past negotiations and that bilateral engagement had historically endured policy shifts.

He described Trump’s threats as a pressure tactic, part of a transactional approach aimed at extracting short-term concessions. Nevertheless, Prof. Pasha noted that the strategic architecture between India and the US remains intact.

He questioned whether the US could offer India energy alternatives — such as affordable oil from Iran — if Washington insists on ending Russian imports. This, he argued, is central to India’s pursuit of strategic autonomy.

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