Published: 09:57 PM, 18 August 2025
Trump's trade tariffs on Indian over Russia oil could be opportunity for UK
Narendra Modi and Donald Trump at the White House (Image: Getty )
”The US and UK have taken very different stances when it comes to trade relations with the world's most populous country.”
This month US President Donald Trump signed an executive order increasing tariffs on imports from India from 25% to a total of 50% in retaliation for India’s purchases of Russian oil. The new tariffs will take effect around August 27, with exceptions only for goods already in transit.
Nothing could better describe this US stance towards India than Henry Kissinger’s saying, “America has no permanent friends or enemies – only interests”; as this very saying describes the US stance, which this time did not consider America’s alliance with India, alongside Australia and Japan in the Quadrilateral Security Dialogue (QUAD) at all.
The tariff increase could shave up to 0.8 percentage points off India’s GDP growth, while making India’s $87 billion (£57 billion) in exports to the US nearly impossible. White House economic adviser Peter Navarro called India a ‘tariff maharaja’ implying that its high domestic tariffs justify the US response.
The Washington-based Center for Strategic and International Studies CSIS emphasised the urgent need to restore trust between the two countries, otherwise their strategic relationship could be seriously jeopardised.
Amitabh Kant, former CEO of the Indian think-thank NITI Aayog, said that this crisis between the US and India is a “once-in-a- generation opportunity” for India to implement deep economic reforms, calling it an “Agneepath moment”, meaning “path of fire”.
Current discussions and analysis on the subject of trade negotiations between India and the US are based on the assumption that the conflict between Russia and Ukraine will continue and that the US will continue to impose economic costs on countries which trade with Russia. However, as Steve Witkoff’s visit to Russia and Trump’s upcoming meeting with Putin in Alaska show, a resolution to the conflict between Russia and Ukraine may not be so far off in the future.
The stated purpose of the recently imposed penalties (in addition to the already announced 25% tariff) against India is to cause economic damage to the country, for its continued purchase of Russian Oil. However, the strategic cost which the US may end up paying due to its rhetoric and aggressive stance could be much higher than the economic cost that India will incur.
According to the latest data from the United States Trade Representative’s Office, total trade (goods and services) between India and the US in calendar year 2024 reached $212.3 billion (£156 billion). Total US imports from India amounted to $128.9 billion (£94 billion). From the current trade basket, the US has exempted certain sectors from the secondary tariffs, particularly electronics, energy products (oil) and pharmaceuticals.
All of these are products of strategic importance to the US. However, the products like textiles, fishery products and gold and jewellery etc. amounting to approximately $40 billion (£29 billion) worth of exports to the US, on which the US has imposed tariffs and penalties are not exclusively for the US market.
India exports these products to many other countries, and there is also an insatiable appetite for these products in the Indian domestic market. Diverting the sale of these products to other markets, like Russia and Brazil and possibly even the domestic Indian market would not be an impossible task. t is only a matter of months before India is in a position to divert sales of these products to other markets, thus offsetting a large part of the economic pain which Trump hopes to impose on India.
The Indian government has historically tended to protect its exporters through export protection programs, for which established institutional mechanisms exist. It is likely that in the current situation, the Indian government will make every effort to mitigate the impact of these tariffs on local traders, as indicated by Prime Minister Modi’s recent statement that he is prepared to deal with the impact of the tariffs.
As Modi said, “India will never compromise on the interests of our farmers, fishermen, and livestock breeders—and if we have to pay a heavy price, we are ready”. This indicates that an export-promotion scheme could be in the offing.
At a time when US-India relations are experiencing this unprecedented crisis, a new, promising chapter seems to be beginning between India and the United Kingdom. The signing of the India-UK Free Trade Agreement (FTA) in July 2025 is not just a trade agreement, but reflects mutual understanding, strategic alignment, and a shared vision for inclusive growth. It came after three years of intermittent but ultimately fruitful negotiations between two mature economies that chose pragmatism over posturing.
The United Kingdom, seeking its economic identity after Brexit, saw in India not only a market but also a partner whose economic rise could complement its own industrial ambitions. Britain’s modern industrial strategy, with its emphasis on advanced manufacturing, clean energy, and digital technologies, resonated with India’s reform-driven development trajectory and its ambition to become a $5 trillion economy by 2027.
The agreement between India and the United Kingdom was not limited to tariff reductions. It offered duty-free access to 99% of Indian exports, simplified the mobility of professionals, and addressed the issue of social security contributions through a double contribution agreement. In essence, it is an agreement of mutual respect and progressive trust. The result is a framework that promises to double bilateral trade to $120 billion (£88 billion) by 2030, catalysing investment, job creation and industrial competitiveness.
The UK’s approach to India is an example of effective diplomatic policy. The result was a comprehensive, high-quality agreement that promises to open up significant opportunities for both sides. Strategically, this move by President Trump towards India will certainly become an obstacle to future diplomatic relations between the two countries.
The current US administration has the opportunity to reshape its relationship with India, not as a competitor, but as a strategic partner whose growth can enhance shared prosperity. Only then will the trade agreement between India and the US be able to overcome the impasse and become a beacon of 21st-century economic diplomacy.
The root of the differences between the US and India lies not in the details of trade policy, but in the broader lens through which each country views the other. India sees itself as a developing economy with legitimate needs for policy space and protective measures.
In contrast, the US sees India’s economic rise as a sign that it should give up such privileges. The tariff dispute between the US and India is not just a trade disagreement, but a clear reminder that on the international chessboard, geopolitical balances are constantly shifting. With the US putting its interests first and India refusing to bow to pressure, the future of this relationship will depend not on rhetoric, but on strategic composure and a willingness to engage in real dialogue.
>> Source: Express
