In early August 2025, the U.S.–India trade relationship hit its most severe rupture in decades after President Trump imposed a blanket 25% tariff on all Indian imports, explicitly linking the move to India’s continued purchase of discounted Russian oil. Trump has threatened to raise duties further and hinted at secondary sanctions, framing India’s energy trade as aiding Moscow in Ukraine. New Delhi has rejected the criticism outright, calling the tariffs “unjustified” and refusing to curtail its Russia ties, arguing that cheap oil is essential for energy security. Instead of retaliating with tariffs, India is cushioning exporters through subsidies and market diversification, while doubling down on its Atmanirbhar Bharat (self-reliance) strategy. The standoff has been amplified by Trump’s overtures to Pakistan and public criticism of India’s economy, eroding trust and stalling leader-level diplomacy despite ongoing lower-level talks.

Geopolitically, the dispute is nudging India closer to alternative power centers. Within BRICS, partners have rallied behind New Delhi, rejecting U.S. economic coercion, while Russia has moved to revive the Russia–India–China (RIC) trilateral format, which India is now more open to engaging. Defense and tech ties with the U.S. remain, but India is hedging—fast-tracking arms deals with Russia, courting other suppliers, and expanding domestic manufacturing. Washington’s tariff brinkmanship risks weakening its Indo-Pacific strategy by pushing a key partner toward greater alignment, even if tactical, with Moscow and Beijing. Prolonged tensions could erode U.S. influence in the Global South, encourage de-dollarization efforts in BRICS, and weaken the cohesion of U.S.-led coalitions in Asia.