As India recalibrates ties with Russia and deepens engagement with China and BRICS partners, Washington’s punitive measures risk straining a strategic partnership decades in the making while reshaping the balance of global power
Donald Trump’s 30th July announcement of 25 per cent tariff on imports from India following New Delhi’s stubborn stand of not opening agriculture, dairy and shrimp markets for US export during five rounds of free trade talk has changed the world order. Later on 6th August additional penalty of 25 per cent was imposed on India for its energy and arms purchase from Russia. The additional tariff was to be effective from 27th August. US Vice President JD Vance recently indicated that the additional tariff can be rolled back if Russia Ukraine conflict comes to an end.
With an eye on piece Nobel Prize, Trump initiated to end the war and held a bilateral meeting on 15th August with Russian President Vladimir Putin at Alaska. Three days later, he held discussions with Vlodomeer Zelenskey Ukrainian President and other European leaders namely British PM, French President, German Chancellor, Italian PM, NATO Chief and EU Chief.
Russia’s demand was the territorial control on Donbas region (90% is already under their occupation), ruling out Ukraine’s entry to NATO as well as no deployment of foreign forces in Ukraine. European leaders were concerned about the security of Ukraine. Trump agreed to sell arms to EU, which can be security guarantee for Ukraine and also accepted to purchase drones manufactured in Ukraine. Zelensky was asked to hold a bilateral talk with Putin and work out the terms of the ceasefire to end the war. The bilateral talk between the two is still not in the sight, and thus rolling back 25 per cent penalty/ sanctions appears to be farfetched.
Imposing tariff is not within the powers of the President, it is to be done by US Congress. Yet, he has invoked emergency power, citing poor health of the economy. Current account deficit in US is all time high, and the treasury does not have money to pay for the bonds that are maturing. Unlike his first term, the Secretaries and Aides do not give advise against his wishes. On the contrary, they amplify whatever he says. The relationship between India and US has grown from scratch. In twenty five years it has grown from strength to strength and has reached a level of significant partnership. None in US administration told Trump that India is a strategic partner, and singling it out will strain the relationship.
Trump’s trade counselor Peter Navarro has supported the penalty and accused India of “profiteering from transaction relating to purchase of Russian oil, which is perpetuating the war in Ukraine”. He adds that the money India gets from its export to America is used for buying Russian oil, which is processed in refineries and sold to EU for profit.
He further says that Russia uses the money to manufacture arms and kill Ukrainians, and American tax payers have to provide more aid and defense equipments to Ukraine. Navarro however conceded that America cannot crack down on China’s oil purchase owing to Beijing’s leverage to Washington. There was no sanction imposed on Russian oil after the war broke out, only a price cap was fixed and US encouraged India to buy Russian oil to augment the supply and to keep prices within limit. India has not violated any sanction. Navarro has no answer to this.
Treasury Secretary Scott Bessent also supported tariff on India in public. He said that Russia’s economy is war economy, as 20 per cent of its GDP is on account of defense manufacturing and also has 20 per cent inflation. He added that while China’s oil purchase from Russia has grown from 13 per cent in 2022 to current 16 per cent, India in the same period has grown from less than 1 per cent to current 42 per cent. Further, India has made a profit of $16 billion by selling the oil after refining to EU.
None in US administration has answered the basic questions; like who is the biggest purchaser of Russian oil? It is China, not India and even Turkey is close behind. Who is the biggest purchaser of Russian LNG; it is EU not India. Are China, Turkey and EU not funding Russia to fight war? America is also importing Uranium, Palladium and fertiliser from Russia. During Alaska summit, Putin has admitted that trade between US and Russia has gone up by 20 per cent since Trump was inaugurated in January. Is American import not funding Russia to enable them to continue the current war? What leverage does China have on Washington? Supply of rare earth magnets, without which American research in Space, defense, fighter aircrafts and several advance technologies suffered. When china imposed restriction on rare earth export, envoys from both countries were asked to rush in and Trump announced a visit to Beijing for bilateral with President Xi Jinping.
Consequently, America-China trade negotiations started in Stockholm. China is paying only 30 per cent tariff on American imports and free trade agreement between the two is still under negotiation, twice though the time limit for the negotiation is extended by 90 days each time. Trump has also imposed 50 per cent tariff on Brazil, accusing its President Lula da Silva for putting ex President Jair Bolsonaro in jail and not ensuring a proper trial for him. Earlier on the occasion of the BRICS summit, Trump cautioned member countries not to de-dollarize their trade lest they will be charged 100 per cent tariff. Angered by the move Lula talked to Indian PM Modi advising him to stand firm to deal with tariff issue. India is next BRICS President in 2026 and French President Macron has congratulated Modi for its success. China has invited Modi for SCO summit in Tianjin and Indian PM has accepted to attend. Amid Trump’s trade tariff on India, Chinese Foreign Minister visited New Delhi recently and held bilateral with his counterpart. China has announced lifting export restrictions on fertilisers, rare earth products, and boring machinery. Both countries have also agreed to resume border trade, restart direct flight, expand kailash mansarovar yatra, and relax VISAs. China criticized Trump’s tariff move from Indian soil and its New Delhi ambassador Xu observed, “Silence emboldens bully”.
Indian foreign Minister Dr S Jaishankar attended India-Russia inter-Governmental Commission on trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC). Two countries resolved to address tariff and non-tariff trade barriers, promoting connectivity and effecting payment mechanism smoothly. They revised to achieve a bilateral trade target of $100 billion by 2030. India’s trade deficit of $59 billion with Russia is on account of energy import.
Both countries agreed to narrow the gap. Since the war broke out in 2022, India’s advantage of $15 per barrel has shrunk to $3 per barrel and Indian Oil companies were reluctant to place further order. Russia has announced 5 per cent rebate on oil sale, and Indian companies now have placed huge orders. Country is only looking for national interest in trades and nothing else.
There is no geopolitics in it. PM in his Independence Day address from Red Fort has stressed to ease GST slabs for people’s welfare and for MSMEs to cut on their cost of production and to remain competitive. He again stressed for Atamnirbhar Bharat. Indian Commerce Minister Piyush Goyal, while speaking at Economic Times World Leaders Forum said that Government is looking to create more domestic demands for sectors hit by US tariffs, including through GST cuts in labor intensive industries such as food processing and textiles.
Neither Indian PM nor any Minister has given statements that strain the relationship with US. Positive observations are made by Ministers that US is an important partner and the issue of tariff is addressed with an open mind and positive outlook and Indo-US relationship is very consequential and very important for both countries.
The writer is a retired Principal Chief Conservator of Forests and Head of Forest Force, Karnataka