India's Foreign Policy Conundrum Following the U.S. Tariffs Setback

Prime Minister Modi’s recent visit to Tianjin to attend the Shanghai Cooperation Organization (SCO) summit after a lapse of seven years of not setting foot on Chinese soil has made the headlines. On previous occasions, Foreign Minister Jaishankar had attended on his behalf. Prime Minister Modi’s trip follows China’s Foreign Minister Wang Yi’s visit to New Delhi which had constituted another important step towards the normalization of relations. In addition, President Putin is scheduled to visit India later in the year, which has not occurred since the invasion of Ukraine in 2022. These are in fact pre-scheduled arrangements in India’s hectic international agenda, which further includes a Quadrilateral Security Dialogue (QUAD) summit in the autumn. However, there are doubts as to whether the latter is taking place unless President Trump attends.

This flurry of international diplomacy is taking place against the background of a 25% tariff rate that includes blanket reciprocal tariffs combined with Section 232 tariff imposition by the United States (U.S.) on specific Indian import goods from 1st August; this set of target sectors that are perceived as critical domestic industries, which need safeguarding for reasons of national security. This measure followed five rounds of U.S.-India trade negotiations which failed to reduce trade tariffs to 15%, along the likes of the E.U., Japan or South Korea. U.S. tariffs on India will hit labor-intensive sectors such as textiles and jewelry, in addition to the copper, steel and aluminum, automobile and auto components sectors. Semiconductors, pharmaceuticals, energy, certain minerals and lumber articles have been initially excluded but could be added at a later stage. 

Against all odds, New Delhi has been punished with additional 25% secondary tariffs (de facto 50%) since 27th August. These additional U.S. tariffs, which the Trump administration’s spokesperson bluntly branded as U.S. ‘sanctions’ at a press conference in the White House, are allegedly linked to Indian oil imports from Russia. India had started to reduce these from March 2025; a substantial shift would take more time, nonetheless. Paradoxically, Beijing has been an even bigger importer of Russian oil since 2022 without this leading to any retaliation by the Trump administration till recently. President Trump has now suggested that the EU impose a 100% tariff rate on China and India to put pressure on Russia through its oil exports. There is certainly much more to the U.S. turnaround in its behavior towards India beyond its Russian oil imports. Washington is signaling a shift in how it values India’s status as a strategic partner.

This follows Islamabad’s nomination of President Trump for the Nobel Peace Prize for his alleged peace facilitation following armed confrontation between India and Pakistan in the aftermath of the Pahalgam terrorist attack in April. New Delhi fervently denies outside facilitation by Trump or anyone else in the matter. This is a historical red line for India. New Delhi has avoided any kind of third-party involvement when it comes to the Kashmir issue since it considers that the latter will favor Pakistan combined with its strong support for the principles of non-interference and state sovereignty.

As noted by analysts on both sides of this conflict, it has taken only a few months for the Trump administration to throw overboard over two decades of a carefully curated relationship with a not-so-straight forward past. U.S. historical support for Pakistan and India’s own tacit preference for the Soviet camp during the Cold War, combined with the U.S. need for Pakistan’s support during the War on Terror (WOT), have complicated U.S.-India ties. This was further compounded by U.S. sanctions on India linked to its space program with Russia (1992) and its nuclear tests from 1998. Notwithstanding, a bilateral agreement towards the peaceful use of nuclear energy was reached in 2008, which remains a cornerstone of the bilateral relationship, and the foundation of the strategic cooperation that has been on an upward trajectory ever since until the recent abrupt deterioration.

Bill Clinton’s landmark Presidential visit to India in March 2000 marked the beginning of a first turnaround. Despite the undeniable ups and downs, the wish to establish a constructive and fruitful relationship with New Delhi has endured for the past 27 years on a bipartisan level from Washington’s side. Till very recently, India was treasured by successive U.S. administrations as a key piece of its global balance of power approach vis-à-vis China’s rising leverage in today’s geo-political setup. The second Trump administration, however, sees India as historically problematic on trade and perhaps as a not-so-valuable strategic partner in the Indo-Pacific.

The path has been less straight forward for India domestically-speaking with key members of the leftist opposition consistently skeptical of India’s rapprochement to the U.S.. Yet, the U.S. card has given India negotiating leverage in global diplomatic spaces, such as vis-à-vis the BRICS and China, as well as towards other Western partners. There is further widespread acknowledgement of how the deepening of a strategic relationship with the U.S. has advanced New Delhi’s standing in critical technologies and defense co-operation. Today, there is consensus and outrage across the Indian political spectrum against Washington’s unforeseen punitive behavior. 

The bilateral U.S.-India relationship had blossomed over these past decades, vibrantly so during the recent Biden administration. This had resulted in numerous agreements towards a consolidated bilateral strategic agenda, which includes critical and emerging technologies, as well as unprecedented progress in defense and security co-operation, including in space and in the maritime domain. In fact, the U.S.-India strategic relationship had become the ‘gold standard’ to look up to for other partners of India, including European countries and the E.U. itself. Not to speak of the increasingly influential Indian American diaspora and their crucial role in Silicon Valley’s technology industry, and even within the U.S. administration.

Truly an India-China Reset?

It is still early to gauge the full breadth of the implications of this turn of events for India’s foreign policy and its other partnerships. Here, I will attempt to address its potential mid-term implications for India’s relationship to Russia, as well as for India-E.U. ties, despite the ongoing flare around an India-China reset. 

Beijing is keen to portray an image of the two Asian giants coming together against what members of the Trump administration term a US-led remade global order. During the recent SCO Summit, President Putin joined along, which compounded the perception of an anti-Western gang round-up. There was talk of creating an SCO development bank. Chinese state media have been referring to how China works with ‘like-minded countries to resolutely safeguard the purposes and principles of the UN Charter, and build a more just and equitable global governance system’. 

It would be naïve to assume that India’s bilateral relationship with China will be a walk in the park going forward. Both countries remain strategic competitors on a sub-regional and Asian regional level. They do share increasing interests on a global scale, particularly against the new global bully: a Trump-led U.S. administration. Yet the stakes for New Delhi are too high to disregard China’s gentle rapprochement based on its economic and technological dependencies on Beijing. India’s manufacturing industry is reliant on resources from China, despite the existing blockade of Chinese investments in electronic manufacturing, which New Delhi is re-evaluating. However, it is Beijing that would have most to gain from increased access to the Indian market. China’s global standing and leverage would be much favored if the meltdown of U.S.-India relations were to endure.

The armed hostilities between India and Pakistan following the Pahalgam attacks on Indian soil has brought to the fore a new strategic triangle: that of India, Pakistan and China. Beijing’s high-end military hardware played a crucial role in Pakistan’s counter-response to the May confrontation; in fact, it is considered the first significant contest between Chinese and Western military hardware. This is a hard pill for New Delhi to swallow. It adds up to existing tensions on the India-China border with repeated skirmishes as recently as in 2020, in addition to the layout of the China-Pakistan Economic Corridor (CPEC) that affects India’s dominance over its backyard. As noted by Nirupama Rao, a former Indian Ambassador to China, trust is absent in this bilateral relationship.

The Depth of the India-Russia Partnership? 

India sees Russia as a trusted partner, and its relationship is one that has endured the test of time. Bilateral ties go beyond defense co-operation; it is termed a ‘Special and Privileged Strategic Partnership’ that is deepening despite outside pressure. Punitive measures against the Russia-India relationship have been taken by both the U.S. and the EU. While Washington has imposed additional tariffs, Brussels has renewed sanctions that encompass restrictions on refined petroleum products from third countries, including India [effective in June 2026]. 

During Foreign Affairs Minister Jaishankar’s recent visit to Moscow, he co-chaired the 26th Session of the India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) which revised the bilateral trade target to USD100 billion by 2030 by managing tariff and non-tariff barriers, improving logistics, finalizing and executing the Program of Economic Cooperation till 2030, promoting connectivity, and streamlining payment mechanisms. Talks further focused on the mobility of Indian skilled workers in sectors like IT, construction and engineering. Political, defense and military-technical cooperation very much remain on the agenda, as well as the fast-tracking of two new Indian Consulates due to open in Kazan and Yekaterinburg.

In addition, the terms of reference for an India-Eurasian Economic Union (EAEU) Free Trade Agreement were recently finalized. This opens the door to India gaining additional market access to Eurasian countries. Roman Babushkin, chargé d’affaires of the Russian Embassy in New Delhi, noted how Moscow would be happy to welcome Indian exports if they face difficulties in entering the US market.

EU-India Relations: Taking a Bold Bet

Despite the consequential setback in India-U.S. relations, there is no obvious changes in gear when it comes to New Delhi’s multi-alignment approach based on guaranteeing its strategic autonomy. If at all, one would expect India to exacerbate its behavior as a liminal power, as noted by Ambassador Nirupama Rao. India perceives itself as a bridge between power blocs, a rising power that aspires to become a leader in the Global South that must, in addition, navigate skyrocketing levels of geo-political instability. Prime Minister Modi’s recent trip to Japan further signaled to India’s intensification of its pluri-alignment strategy against the unexpected breakdown in relations with the U.S..

Modi’s holding hands and long car ride with Putin during the recent SCO summit in Tianjin surely must have raised a few eyebrows in Brussels. This took place in the course of the same summit when Xi Jinping referred to the fact that ‘global governance has reached a new crossroads’ and alluded to the need of a China-friendly world order. India is due to host the upcoming BRICS 2026 summit. All eyes will be set on the narratives emerging from there.

In what concerns E.U.-India relations, there is no reason to foresee any setback, on the contrary. The U.S. administration is pushing both of its historically key partners between a rock and a hard place. Therefore, it would be wise for India and the E.U. to capitalize and seize the opportunity to finalize a long-due Free Trade Agreement (FTA), as well as deepen their strategic co-operation in IT and critical technologies, green technology and defense. Russia remains the white elephant in the room. 

It is up to policymakers in Brussels to decipher how much weight to give to this ‘boulder-in-the-road’ against all that there is to gain from further deepening the E.U.-India strategic relationship. Thus far, India’s ambivalence towards the Russian invasion of Ukraine has not hindered the bilateral strategic partnership from moving forward. New Delhi is further unlikely to throw itself with full open arms into Moscow’s sphere of influence as a reaction to Washington’s behavior and a counterbalance to China. Going all in for a strengthened E.U.-India partnership will help neutralize the current U.S. administration’s unpredictability and punitive behavior, while balancing out Beijing’s additional advantage as a result thereof. 

Can the EU maintain its global influence, improve its economic performance and solve its foreign policy dilemma between a normative and a neo-realist approach? Desperate times require desperate measures, including redrawing red lines.

Copyright image : Sanchez / MAXIM SHIPENKOV / POOL / AFP