India-US spat over trade and oil threatens wider fallout

President Donald Trump's recent attacks on India, over its purchase of Russian oil and its trade practices, could reverse the growing partnership between the two countries. His executive order, imposing a 25% tariff on Indian imports on top of an existing 25% tariff, due to these oil purchases, has intensified the dispute, with India's opposition parties and public urging Prime Minister Narendra Modi to resist what they perceive as Trump's bullying.

India, a key partner for Washington in countering China's rise, finds itself at odds with Trump’s trade policies. While the US administration seeks to exert pressure on Russia, India's strong ties with Moscow and its significant trade surplus with the US have put it in Trump’s crosshairs. The tension has escalated after Trump mocked India's oil purchases, even suggesting it might buy oil from its arch-enemy Pakistan. New Delhi, in a rare move, accused Washington of double standards, highlighting the continued purchase of Russian products by the US, despite criticism of India’s oil imports.

India has also rejected Trump’s claims of using trade to pressure the country into ending its military conflict with Pakistan. The tariffs have been labelled "unfair" by India, which has vowed to take all necessary steps to protect its interests. However, analysts caution that any further escalation could harm India in other strategic areas, as it lacks leverage like China's rare-earth supplies to counterbalance the situation.

Under Trump, the US has cultivated closer ties with India as part of a broader strategy to counter China. Yet, analysts warn that recent developments could undo these gains, potentially sending the relationship into one of its worst phases since the 1998 nuclear tests, which led to US sanctions.

India’s state refiners have already scaled back their Russian oil imports under pressure from the US. With no immediate leverage, Modi faces a delicate balancing act between complying with US demands and avoiding the perception of yielding to Trump’s pressure.

Beyond trade, tensions over key issues such as US work visas for Indian tech professionals and offshoring further complicate relations. These topics, deeply intertwined with US domestic politics, risk becoming contentious points in future negotiations, especially as they pertain to India's significant outsourcing industry.

Despite these hurdles, India has sought to bolster ties with US rivals, including Russia and China. Russian President Vladimir Putin is expected in New Delhi this year, and Modi is planning his first visit to China since 2018. Analysts note that these efforts might be part of India’s broader strategy to maintain diplomatic flexibility while navigating the complexities of its relationship with the US.

As India explores new avenues for strengthening ties with Russia and China, it remains mindful of the Trump administration’s policies, hoping to avoid further friction and to protect its national interests in an increasingly complex global landscape.