Following President Donald Trump’s 2025 tariffs on Indian goods, questions have arisen about the reliability of the United States as a partner. The new tariffs, imposed amid criticism of India’s purchases of Russian oil and weapons, threaten to disrupt India’s exports and have strained diplomatic relations. Reconciliation between the two nations will require constant evaluation due to bruised sentiments and the unpredictable nature of personalized diplomacy. India’s policy makers will have to engage with the US while also hedging their bets against unpredictable policy shifts.
The Trump administration miscalculated that under its pressure, India, like Japan and the European Union (EU), would ultimately make major concessions affecting sensitive domestic constituencies. It underestimated both the structural sensitivities of the Indian economy and the strategic implications of overreliance on coercive diplomacy. The tariffs imposed by President Donald Trump have prompted India to significantly recalibrate its foreign policy, shifting toward strategic partnerships with Russia and China while diversifying its economic relationships with other nations.
India has rejected U.S. demands to cut off its purchases of discounted Russian oil, which the U.S. government claims is funding Russia’s war in Ukraine. New Delhi argues that it must ensure its energy security and notes the inconsistency of punishing India while other countries continue to buy Russian energy. Amid U.S. criticism over India’s discounted Russian oil purchases, India has affirmed its “special relationship” with Russia. India has made it quite clear that Russia, a longtime defence partner, remains a resilient ally. Thus, the U.S. tariffs, combined with India’s continued purchase of Russian oil, have strengthened the historical India-Russia partnership.
As a buffer against U.S. protectionism, India has deepened trade and investment ties with other major economic blocs. India and the UK signed a landmark Comprehensive Economic and Trade Agreement (CETA) on 24 July 24 after more than three years of negotiations. The Free Trade Agreement (FTA) negotiations between India and the European Union have reportedly reached an advanced stage. It is expected that the agreement will be finalised by the end of 2025.The agreement will reduce trade barriers, enhance market access, and create new opportunities for businesses. Following their summit in Tokyo, PM Modi and the then Japanese PM Shigeru Ishiba agreed to boost Japanese private investment in India to about $6.8 billion a year.
They also agreed to increase exchanges of workers and students to half a million people in the coming five years. The two governments hope India’s young workforce can help address labour shortages caused by Japan’s aging and declining population. Starting with the elevation to a Comprehensive Strategic Partnership in 2020, India and Australia have significantly deepened cooperation on economic, strategic, and defense matters, driven by converging interests in the Indo-Pacific region and a mutual push for supply chain diversification away from China. The landmark Economic Cooperation and Trade Agreement (ECTA), which entered into force in 2022, has greatly strengthened both economies. It has been instrumental in reducing trade barriers and has already saved Australian importers hundreds of millions in tariffs.
Over 85 per cent of Australian goods exports by value to India are now tariff free, rising to 90 per cent by 1 January 2026. Trump’s recent tariffs in 2025 have prompted both India and South Korea to explore strengthening their bilateral relations. The two countries have an ambitious goal to increase the bilateral trade figure from $27.54 billion in 2024 to $50 billion by 2030. Key areas for cooperation include technology, defense, and strategic partnerships, particularly in the Indo-Pacific region. Brazil and India, the two countries most heavily impacted by U.S. trade sanctions, are intensifying bilateral relations in a bid to mitigate the economic consequences of recent tariff hikes under Trump.
Bilateral trade between India and Brazil reached about US$ 12 billion in 2024, with a surplus in India’s favour. Brazil hopes to expand that figure significantly, aiming to surpass US$ 20 billion by 2030. Strategic sectors include agriculture (notably genetic technology exchange), pharmaceuticals, and energy. Brazil exports crude oil to India and imports refined products. Another Latin American country which is becoming a key focus is Argentina. Both countries are working to diversify and expand their bilateral economic partnership, which has seen significant fluctuations in recent years due to external factors.
Bilateral trade amounted to $5.2 billion in 2024 and shows signs of strong growth in 2025, driven by improved conditions in Argentina and stronger bilateral relations following PM Modi’s visit in July 2025. To secure energy and expand its economic influence, India has focused on strategic partnerships with Gulf states, such as a Comprehensive Economic Partnership Agreement with the United Arab Emirates and growing defense cooperation with Saudi Arabia. The trend of deepening India-Gulf ties is likely to continue, driven by mutual economic interests and India’s pursuit of a more diversified and multi-aligned foreign policy. India is also revitalizing ties with Africa, recognizing its demographic and resource advantages.
To counteract recent U.S. tariffs, India is strengthening its ties with Africa by leveraging existing investments, relocating some production, diversifying trade, and developing regional value chains. This strategic shift aims to mitigate the impact of U.S. protectionism while advancing both India and Africa’s economic goals. Indian companies, particularly in the apparel and textile sectors, are expanding their manufacturing bases in Africa to avoid U.S. tariffs. Following recent diplomatic tensions, Canada has emerged as a renewed focus for India’s economic diplomacy, with both nations actively working to reset relations. Despite the 2023 political fallout, trade remained resilient and grew 3.2 per cent in fiscal year 2025, reaching $8.6 billion.
Both sides are now taking steps to restore a comprehensive economic partnership. The reset is motivated by a shared interest in diversifying trade and investment outside of reliance on the U.S. Recent high-level meetings, including a meeting at the June 2025 G7 Summit, have initiated a process to reset relations. A positive tone has been set to revive trade talks and enhance economic partnerships. Summing up, neither the US nor China will be a long term reliable partner, for both will try to maximise their own selfish advantages from their relationship with India.
India should not put itself in a situation where it has to choose between the devil and the deep sea. India’s foreign policy should continue to be rooted in multi-alignment, using engagement with both the US and China to advance its own national interests, rather than siding definitively with either. India will continue to pursue an independent, multi-aligned foreign policy and increase its own global influence. The elephant will not dance only with the dragon or the bison but with different partners of its own choosing depending on the needs of the situation.
(The writer, a retired IFS officer, served as India’s Ambassador to Kuwait and Morocco and as Consul-General in New York)