World trade is navigating turbulent times, with the global landscape appearing increasingly unpredictable. The past week, in particular, has witnessed a series of significant events directly affecting India-US trade relations, highlighting the growing complexity of global commerce and strategic alignments.
Judicial Blow to US Presidential Tariff Authority
In a landmark ruling, the US government suffered a setback in federal court concerning the scope of presidential authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Historically, IEEPA has been widely used by US Presidents to implement trade sanctions and tariffs, most notably during the Trump administration. The federal court’s decision casts doubt over the US’s ability to use tariffs as a strategic tool — not only for economic purposes but also for foreign policy objectives. Should the Supreme Court uphold this verdict, the era of leveraging tariffs as a blunt instrument of national policy may be nearing its end. Such a development would have far-reaching consequences for the international business community, compelling companies and countries to rethink investment andsupply chain strategies centred on the US market.
Heavy Tariffs on Indian Exports Over Russian Oil
Another significant development occurred on August 27, 2025, when the US imposed an additional 25 per cent tariff on India for purchasing Russian oil. Combined with earlier tariff increases, the total tariff burden on Indian goods now exceeds 50 per cent. This places India among the most heavily tariffed US trading partners — a status that threatens core Indian export sectors, particularly labour-intensive industries such as textiles, apparel, leather, footwear, gems and jewellery, and shrimp. Many of these sectors, already grappling with rising operational costs and post-pandemic recovery challenges, now face severely reduced access to the US market. Consequently, India risks ceding market share in critical categories to competitors such as Vietnam, Bangladesh, and Indonesia, who benefit from significantly lower tariffs
Diplomatic Optics at the SCO Summit
Amid these trade tensions, the optics from the recent SCO Summit in Tianjin, China, were striking. Indian, Chinese, and Russian leaders shared the platform with visible camaraderie — an image certain to attract attention in Washington. For the US, this signals India’s gradual pivot towards alternative power centres, a move partly influenced by Washington’s own tariff-driven policies. Ironically, the Trump-era strategy of using tariffs as leverage appears to be nudging India closer to Russia and China, contrary to American strategic objectives. This public display of unity at the SCO Summit underscores how trade disruptions and geo-economic pressures can produce unintended geopolitical consequences.
Trade Talks Still Alive
Despite rising tensions, there are signs of ongoing diplomatic engagement. Indian Commerce Minister Piyush Goyal recently reaffirmed that the long-negotiated India-US trade deal could be finalised by November 2025, offering reassurance that dialogue continues. The willingness of both nations to persist in negotiations reflects a shared recognition of the mutual benefits of restoring stability and expanding bilateral trade. It demonstrates that, even amid heated rhetoric and protectionist measures, both democracies remain committed to maintaining open channels for negotiation and compromise.
Looking Ahead
The months ahead remain fraught with uncertainty. If the US Supreme Court upholds limitations on presidential authority under IEEPA, it could signal the end of tariffs as a quick-fix tool for strategic pressure. Such a precedent would reshape US trade policy and undermine a key Trump-era tactic, requiring investors and global exporters to recalibrate risk and investment strategies.
World Trade Turbulence: India-US Relations Tested Amid Tariffs and Geopolitical Shifts
Countries deemed “strategic threats” might find themselves with fewer avenues for ad hoc US retaliation.
For India, the newly imposed tariffs threaten the viability of key export sectors that employ millions and rely on seamless access to the US market. On the broader diplomatic stage, the SCO Summit highlights India’s growing engagement with multipolar frameworks-a consequence partly driven by escalating trade tensions. Yet, public reassurances from Indian officials regarding a potential bilateral trade deal suggest that India-US relations may bend under pressure, but are unlikely to break.
Closing
The events of the past week illustrate the intricate intersection of commerce, geopolitics, and law. India-US trade relations, once seen as a cornerstone of global economic integration, now face formidable challenges. Yet, each crisis also presents opportunities-for diplomacy to prevail, for commerce to discover new pathways, and for both nations to reaffirm the common ground underlying their partnership.
For India, these developments underscore the urgent need to accelerate domestic reforms: reducing red tape, lowering manufacturing costs, fostering innovation, and building resilient local supply chains. Strengthening homegrown industries, reducing import dependence, and creating jobs will not only buffer India against external shocks but also position it as a more competitive force in global trade. Amid continuing turbulence, India’s long-term interests will be best served by balancing external engagement with an inward focus on transformative, growth-oriented policies.
Countries deemed “strategic threats” might find themselves with fewer avenues for ad hoc US retaliation.
For India, the newly imposed tariffs threaten the viability of key export sectors that employ millions and rely on seamless access to the US market. On the broader diplomatic stage, the SCO Summit highlights India’s growing engagement with multipolar frameworks — a consequence partly driven by escalating trade tensions. Yet, public reassurances from Indian officials regarding a potential bilateral trade deal suggest that India-US relations may bend under pressure, but are unlikely to break.
The events of the past week illustrate the intricate intersection of commerce, geopolitics, and law. India-US trade relations, once seen as a cornerstone of global economic integration, now face formidable challenges. Yet, each crisis also presents opportunities — for diplomacy to prevail, for commerce to discover new pathways, and for both nations to reaffirm the common ground underlying their partnership.
For India, these developments underscore the urgent need to accelerate domestic reforms: reducing red tape, lowering manufacturing costs, fostering innovation, and building resilient local supply chains. Strengthening homegrown industries, reducing import dependence, and creating jobs will not only buffer India against external shocks but also position it as a more competitive force in global trade. Amid continuing turbulence, India’s long-term interests will be best served by balancing external engagement with an inward focus on transformative, growth-oriented policies.