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Commodity breakthrough: how the tariff conflict between the United States and India will affect global trade
The US-Indian trade risks sinking by tens of percent if the US administration decides to raise duties from 25% to 100%, and New Delhi introduces its own measures in response, experts interviewed by Izvestia believe. In 2024, the trade turnover amounted to $129 billion. American leader Donald Trump did not choose India by chance, because it is a geopolitical rival of China, with which the United States now wants to reach an agreement on the trade issue. In addition, the US president wants to put pressure on Russia. However, the quarrel between America and India is objectively in the hands of our country, experts say. Why New Delhi will not abandon Russian oil and what will be the trade turnover between our countries - in the material of Izvestia.
Why is Trump raising tariffs against India
Initially, Donald Trump imposed tariffs of 25% against India, but on August 4, he announced that he intended to "significantly increase duties" for New Delhi due to deals with Russian oil. The American leader accused the country of buying large volumes of our raw materials and then selling them on the open market. However, back in mid-July, the president threatened buyers of Russian raw materials with tariffs of 100%.
The Indian Foreign Ministry considered the US discontent groundless — the state will take all necessary measures to protect its national interests and economic security, they said. In addition, the Foreign Ministry recalled that after the outbreak of the crisis in Ukraine, the United States encouraged India to import Russian oil in order to strengthen stability in global energy markets.
"The United States itself continues to import depleted uranium hexafluoride from Russia for the nuclear industry, palladium for the electric vehicle industry, fertilizers, and chemicals," they stressed.
The United States also intends to impose sanctions against the main importers of oil from Russia and the BRICS members — China, India and Brazil, said the American permanent representative to NATO Matthew Whitaker.
Donald Trump announced the imposition of duties against 185 countries in early April. Later, he repeatedly froze these tariffs. As a result of the trade deals, rates for some countries were reduced, for example, for Japan from 25% to 15% and Indonesia from 32% to 19%. With the European Union, Trump agreed to reduce tariffs from 30% to 15%, and in return, the EU promised to abandon Russian oil and gas supplies and annually purchase $250 billion worth of energy from the United States during the three years of the American president's rule. In addition, duties against China were reduced from 145% to 30%. A "trade truce" is currently in effect between the parties for 90 days, and it is scheduled to end on August 12.
Trade between India and the USA
Negotiations between the United States and India on a trade agreement are still ongoing, so the threat of secondary duties can be used as a lever to achieve more beneficial results for the United States, said Olga Belenkaya, head of the Macroeconomic analysis department at Finam. In 2024, the trade turnover between the two countries amounted to $129.2 billion. If the terms of trade for India become tougher, then the bilateral trade turnover with America may decrease by about 7-10%, says Ekaterina Novikova, associate professor of the Department of Economic Theory at Plekhanov Russian University of Economics.
US President Donald Trump delivers a speech on tariffs, April 2
According to Maxim Chirkov, associate professor of the Department of Economic Policy and Economic Measurements at the Institute of Economics and Finance of the State University of Management (GUU), in the case of 100% tariffs from the United States and retaliatory measures from India, the reduction in trade could be even greater — "by tens of percent." But such duties will cause serious damage, first of all, to the economy of the States.
Nevertheless, the American market for India remains the largest export destination with a share of 18% and it may be difficult to replace it in a short time, Olga Belenkaya noted. Donald Trump managed to reach a fairly profitable trade agreement with the EU, and an ambiguous dialogue with China is next, independent expert Andrei Barkhota drew attention.
— In order to achieve the desired result, the American administration goes to tricks. The fact is that India is a geopolitical rival of China. And Washington's pressure on New Delhi is also in the orbit of Beijing's interests. In addition, America is limiting contacts with Taiwan and extending the validity of more restrained duties on imported Chinese products. These steps are aimed at achieving China's relative favor," the economist explained.
According to him, such statements by Trump have two goals — a peaceful settlement in the Ukrainian conflict and the approach of a compromise with China.
Is there a possible political rift between India and the United States
The Trump administration has attached great importance to building relations with India, which remains an active participant in BRICS and the SCO. So, in April, US Vice President Jay Dee Vance made a three-day visit, during which they discussed the tariffs imposed by Washington on Indian steel and aluminum, as well as the prospects for the supply of American weapons.
The new diplomatic position of the United States differs significantly from the previous policy, which allowed New Delhi to have long-term relations with Moscow, but at the same time considered India as a strategic partner capable of balancing China's influence in Asia. For example, Matthew Whitaker, Permanent Representative to NATO, said that the United States intends to apply sanctions against China, India and Brazil in order to achieve a cessation of hostilities in Ukraine.
India demonstrates that it makes independent decisions, while New Delhi is aware of the importance of economic and political relations with the United States and Russia, said Tatiana Shaumyan, head of the Center for Indian Studies at the Institute of Oriental Studies of the Russian Academy of Sciences.
— The United States and India are striving to show their independence in decision-making. The economic and political relations between the two countries are quite close. We should not forget about the Indian diaspora living in the United States. But in this case, Prime Minister Narendra Modi is striving to demonstrate the independence and independence of the country's foreign policy," she said.
Economic and purely political interests converged, the expert added. India strives to maintain its position as a great Asian power that makes decisions in accordance with its national interests.
However, the political rift between the United States and India can hardly be considered truly deep, says Vladimir Sotnikov, a political scientist, orientalist, and expert on South Asia.
— The personal ambitions of Donald Trump and the firm position of Naredra Modi collided here. In the near future, there will be skirmishes over oil and sanctions, but the strategic course of India and the United States towards military partnership will not change," he believes.
According to him, India manages to pursue an equidistant policy. Now its policy is to maintain a strategic partnership with the Russian Federation and develop it with the Americans. At the same time, the quarrel between Washington and New Delhi objectively benefits Moscow. In turn, the Kremlin said that Russia considers the US threats against India illegal.
— We hear a lot of statements that are actually threats. Attempts to force countries to end trade relations with Russia. We do not read such statements as legitimate," said Dmitry Peskov, a spokesman for the Russian president, noting that sovereign countries have the right to choose their own trading partners.
What are the risks for the Russian Federation due to oil duties?
The trade turnover between Russia and India in 2024 amounted to a record $70.6 billion. At the same time, Moscow imported only $4.8 billion worth of goods, and exported $67.2 billion, Olga Belenkaya, head of the macroeconomic analysis department at Finam Federal State Enterprise, recalled. She added: the lion's share of purchases from our country is made up of mineral resources — about $60 billion.
Experts interviewed by Izvestia are confident that by the end of 2025, the trade turnover between Moscow and New Delhi will grow in any case. As Natalia Milchakova, a leading analyst at Freedom Finance Global, noted, in the absence of external shocks, mutual trade will amount to about $74-76 billion. In the case of any intervention, it may not grow so significantly — to about $71-72 billion.
Indian Prime Minister's National Security Adviser Ajit Dowal arrived in Moscow on August 5. His visit is aimed at strengthening defense and energy ties with Russia, but its importance has become particularly significant after Trump's statements. Also on Tuesday, Russian Deputy Defense Minister Alexander Fomin met with Indian Ambassador Vinay Kumar. They confirmed their commitment to strengthening cooperation in the spirit of a particularly privileged strategic partnership.
If New Delhi stops buying our energy resources, the price of oil on world markets will rise to $80-85 per barrel. However, India will suffer from such a refusal, explained Nikolay Dudchenko, an analyst at Finam Financial Group. There are risks for Russia here too, because the budget risks losing revenue from the sale of black gold.
Nevertheless, it is unlikely that India will abandon our oil. Therefore, the forecast for the cost of Brent at the end of August remains at the level of $67-72 per barrel, Natalia Milchakova noted.
Maxim Chirkov from GUU added: Russia can also benefit from such measures by Trump — in the face of duties against trading partners, it will buy products at reduced prices, since the American market will be closed.
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