When President Donald Trump announced a unilateral 50% tariff on Indian goods last week, doubling down on an already aggressive 25% baseline, it marked a clear shift in tone. This was no longer about fair trade or market access, rather a punishment. A reaction not to spreadsheets, but to India’s refusal to play by Washington’s geopolitical expectations, specifically its continued purchase of discounted Russian oil. In issuing those tariffs, Trump signalled that India’s right to economic independence ends where America’s political agenda begins.
There was a time when such disputes might have gone to the World Trade Organization. But the WTO’s appellate body is non-functional, and the multilateral trading system is in disrepair, not least because of US obstructionism. The rules are broken, and power remains. Trump very well understands that power is best deployed when institutions are weakest. If India chooses a purely rhetorical or technocratic response, it will misread both the moment and the man. India-US trade figures reveal much about what’s at stake and what leverage exists. In 2024, goods trade between the two countries stood at $128.9 billion. India exported $87.3 billion and imported $41.5 billion, leaving the US with a $45.8 billion trade deficit. In the first half of 2025, India’s exports to the US surged to $56.3 billion, while imports fell to $22 billion.
That growing imbalance, politically unpalatable in a Trump campaign cycle is the real trigger for his latest volley. According to PHDCCI, the tariffs could affect $8.1 billion in Indian exports and marginally dent GDP by 0.19%. But in contrast, Indian retaliation could strike $10-12 billion worth of US goods entering India. The imbalance is real, but so is India’s leverage. This kind of trade deficit may look like an economic metric, but for Trump who has come to power with the promise to deliver, especially to its MAGA crowd, it turns into a political weapon. In the short term, it feeds populist outrage over lost jobs and “unfair” trade. Over time, it risks fuelling protectionism, eroding trust, and pushing strategic partners apart. But India is not the one on the defensive here.
The imbalance is proof of India’s rising economic muscle. The US may be sounding the alarm, but India holds the volume knob. It’s time to use it. What should India do in response? There can be no one answer. India needs a layered approach which includes short-term countermeasures, medium-term diplomatic repositioning, and long-term economic restructuring.
IN THE SHORT TERM
In the short term, India must cause discomfort where it hurts most: Trump’s vote bank. That means targeting politically sensitive US exports including aircraft, autos, and consumer goods. India has active aircraft and defence procurement deals with Boeing and US firms worth over $12 billion. Slowing these deals or pivoting to Airbus and other partners would send a loud message. Consumer imports from the US worth over $5.3 billion in 2024 and spread across processed foods, cosmetics, and lifestyle goods are equally fair game. Regulatory tweaks, public procurement exclusions, and shelf-space limits could hurt producers in Texas, Iowa, and Wisconsin.
US vehicle exports to India, totalling $804 million in 2024, can also be stalled not through outright bans, but by tightening emissions regulations, delaying certifications, and conducting lengthy compliance reviews. None of these steps would violate international norms. They would simply apply Trump’s own playbook, which is slow, targeted pressure through domestic levers.
IN THE MEDIUM TERM
The medium-term strategy must be diplomatic and collective. India is not alone in its experience of Trump’s economic coercion. Canada, Mexico, the EU, Brazil, and South Korea have all been targeted. India should quietly initiate a countercoercion coalition, perhaps informal but clearly visible. Coordinated retaliatory statements, information sharing, and parallel responses can raise the costs of US tariff aggression. At the same time, India must accelerate trade realignment including deepen ties with Germany and France for aerospace and cleantech needs; expand energy and technology corridors with the Gulf and Africa; and engage ASEAN economies to strengthen regional supply chains.
Digital sovereignty is another untapped asset. India can tighten regulation on US tech giants through data localisation requirements, ad revenue taxation, and algorithmic transparency rules. These companies depend on the Indian market. Strategic regulation can apply pressure without appearing protectionist.
IN THE LONG TERM
Long-term, India’s goal must be economic resilience and global autonomy. That means fewer dependencies on any single country including (or especially) the United States. The Production-Linked Incentive (PLI) schemes are already showing results. Electronics exports stood at $23.5 billion in FY2024/25; iPhone exports alone topped $7 billion.
This momentum must now expand into semiconductors, aerospace, and critical minerals. India should also deepen its push toward rupee-based trade settlements, especially in oil and resource sectors, where dollar dependence exposes India to geopolitical financial pressure. With over 20 countries already experimenting in rupee trade, this should be institutionalised further. But if India truly wants to resist being strong-armed, it must invest in deepening its global presence not just through exports, but through influence, acquisitions, and market capital. India today is home to over 850,000 millionaires and more than 166 billionaires, ranking it among the top five countries by ultra-high-net-worth individuals. Indian capital is no longer just local, it is global and mobile.
Companies like Adani, which operates ports, power grids, and infrastructure across Asia, Africa, and Australia, are becoming economic anchors in multiple geographies. Tata Group, once seen as a conservative conglomerate, emerged in the aftermath of the 2008 global financial crisis as a bold global acquirer buying up Jaguar Land Rover, Tetley, and steel assets in Europe. Today, its IT arm, TCS, is one of the world’s top tech service providers. These are not just success stories, they are strategic assets. As another global slowdown looms, Indian corporates should view it as a window.
Slumps create space for bold acquisitions. India’s growing market cap, both domestic and crossborder, must now translate into soft power, strategic insulation, and economic diplomacy. An India that builds and owns global companies becomes far less susceptible to being cornered. It stops being just a participant in global trade and starts shaping it.
STRATEGIC QUESTION
Yet all this raises a deeper strategic question: can India afford to keep playing both sides forever? For years, India has maintained a delicate balancing act, imported discounted Russian crude, while courting Western investment and security partnerships. It is no secret that many of the very nations condemning Moscow’s war on Ukraine are quietly purchasing refined products made from Russian oil exported via Indian ports. India has been, in some sense, a geopolitical refinery by processing Russian flows into Western-friendly outputs.
This makes economic sense. But strategically, it is a dance with diminishing returns. There is a growing belief in many Western capitals that Russia cannot sustain its war machine without oil revenues. The longer the war drags on, the stronger the push may become to penalise even indirect financial support. Should secondary sanctions ever materialise, India may find its room for manoeuvre sharply reduced. Russia is a longstanding ally. But the future may not favour equidistance. India, uniquely positioned as a benefactor to both Russia and the antiRussia coalition, must reassess its role in this geopolitical theatre. India must be clear-eyed. Friendship with Russia may be historical, but it is not destiny. Partnership with the West may be beneficial, but it is not without cost. Strategic autonomy will require difficult recalibrations. Choosing selfinterest over sentiment. India must define that interest now, before circumstances do it for us.
INDIA MUST PIVOT
None of this means India should panic. But it does mean India must pivot. Tariffs under Trump may be loud and dramatic, but they are not destiny. With a carefully layered strategy, India can both withstand and outmanoeuvre the coercive tactics currently deployed against it. More importantly, this is a moment for reflection. India must look inward to develop a self-reliant economic model that isn’t vulnerable to external moods.
Dr Neeti Shikha is law and policy researcher who teaches law at the University of the West of England, UK.
