India-U.S. Tension on Trade and Oil Sparks Broader Conflict

President Donald Trump’s recent criticism of India over trade policies and purchases of Russian oil threatens to undo twenty years of diplomatic progress. Experts and officials warn that this tension could also disrupt other areas of bilateral cooperation, as domestic political pressures push both nations toward hardened positions.

Indian opposition parties and the public have called on Prime Minister Narendra Modi to resist what they perceive as bullying by Trump. On Wednesday, Trump signed an executive order imposing an extra 25% duty on Indian imports, added to an existing 25% tariff, citing India’s significant Russian oil imports as the reason.

Although India has become a strategic partner for Washington in its rivalry with China, its sizable US trade surplus and close ties with Russia—currently under pressure from Trump to negotiate peace with Ukraine—have made it a prime target in the Republican leader’s global tariff strategy.

Trump’s suggestion that India could source oil from its rival Pakistan has also been poorly received in New Delhi, according to two Indian government sources. Additionally, India has rejected repeated claims by Trump that he used trade leverage to influence a recent conflict between Pakistan and India.

This week, India issued a strong statement criticizing the US for applying two different standards—targeting Indian Russian oil imports while continuing to buy Russian uranium hexafluoride, palladium, and fertilizers. The government called the tariffs “unfair, unjustified, and unreasonable,” vowing to take all necessary measures to safeguard national interests.

However, officials recognize that further escalation could harm India beyond economic matters. Unlike China, India lacks leverage—such as rare earth mineral supplies—to compel the US to improve trade terms. Over recent years, successive US administrations, including Trump’s, have actively cultivated a relationship with India, viewing it as a key partner to counter China’s growing influence.

Nonetheless, analysts argue that Trump’s recent approaches have possibly brought the relationship to its lowest point since 1998, when the US imposed sanctions on India after nuclear tests.

“India finds itself in a difficult spot: due to Trump’s pressure, Modi might reduce Russian oil purchases, but he can’t openly admit it for fear of unraveling diplomatic efforts or appearing to capitulate,” explains Ashley Tellis of the Carnegie Endowment for International Peace in Washington.

“We risk a needless crisis that could undo a quarter-century of progress with India.”

Recently, Indian state refiners have halted Russian oil imports as discounts diminish and pressure from Trump increases, according to Reuters.

New Strains in the Relationship

Another major challenge is the divergence in priorities, particularly on issues like work visas for tech workers and offshoring services, which are sensitive topics in US domestic politics. 

India has historically benefited from US work visa programs and outsourcing of software and business services—areas that have caused friction, as Americans have lost jobs to cheaper Indian workers. Experts warn that relations could become a political battleground within the US, where issues like immigration, deportation, and international tech collaboration spark intense partisan debate.

Since the 2008 nuclear technology cooperation agreement, the two countries have deepened intelligence sharing and defense collaborations, while also expanding engagement with Australia and Japan through the Quad to counter China’s influence in the Indo-Pacific region.

Despite Modi’s good rapport with Trump and then-President Biden, cracks have appeared. For instance, images from February showing Indians deported on US military aircraft—shackled and distressed—stunned the nation just days before Modi’s visit to Trump to discuss tariff issues.

The relationship was further strained in late 2023 when the US claimed to have thwarted a plot involving Indian links to an assassination attempt on a Sikh separatist leader in the US. India denied any official involvement.

“The credibility of the Modi government in the US has declined,” said Sukh Deo Muni, a former diplomat and professor at Jawaharlal Nehru University in New Delhi. “There are those who believe India or Modi need to be ‘brought back on track,’ and if that trend continues, India faces significant challenges in navigation.”

Strengthening Ties with US Rivals

An Indian government source suggests that India is gradually repairing its relationship with the US while increasing engagement with other nations affected by Trump’s tariffs and aid reductions, including members of the BRICS bloc—Brazil, Russia, China, and South Africa—as well as the African Union.

India is taking steps to deepen relations with Russia and China. Russian President Vladimir Putin is expected to visit New Delhi this year, and Russia has stated discussions on enhancing strategic defense cooperation are underway.

India has also increased engagement with China, following years of tension after a deadly border clash in 2020. Modi is scheduled to visit China soon for the first time since 2018.

“Russia will likely try to use the US-India rift by proposing the revival of the Russia-India-China trilateral and new defense projects,” commented Aleksei Zakharov of the Observer Research Foundation in New Delhi. “India will be cautious of sanctions and seek a balanced approach in dealing with the US.”