By WISI BABA
ISLAMABAD 8 August 2025: Our “Incredible India” is currently in Donald Trump’s crosshairs. This is the same India now facing the brunt of U.S. tariffs. To understand this, consider that America’s two major geopolitical rivals are the BRICS and SCO alliances. In both, Modi’s India played the role of a black sheep—working in favor of U.S. interests and obstructing meaningful progress.
In 2023, India assumed the chairmanship of the Shanghai
Cooperation Organization (SCO). It downgraded the significance of the summit by
hosting it virtually. The following year, in 2024, the SCO summit was held in
Kazan, Russia. Prime Minister Narendra Modi did not attend; External Affairs
Minister S. Jaishankar represented India instead. Both Russian President
Vladimir Putin and Chinese President Xi Jinping were present. Modi’s absence
was interpreted through the lens of India-China and Russia-China relations.
In 2023, President Putin signaled a warming of ties with
Pakistan, inviting it to join the North-South International Transport Corridor
during his State of the Union address. India opposed BRICS’ proposal for a
shared currency and a non-dollar payment system. In both BRICS and SCO, India
continued to act as a proxy for U.S. interests. When SCO issued a strong
condemnation of U.S. and Israeli strikes on Iran, India distanced itself from
the statement and appeared aligned with Israel.
After the Ukraine war began, the Biden administration
encouraged India to buy Russian oil to stabilize global energy supply and
prices. However, Trump imposed a steep 25% tariff on India—the highest in South
Asia—citing its oil purchases from Russia. While the U.S.-China tariff war
continues, China has not faced additional tariffs for buying Russian oil and
coal. The European Union remains the largest buyer of Russian LNG, which
arrives via pipeline. Turkey also imports significant volumes of Russian oil and
gas.
Meanwhile, the U.S. continues to import Russian fertilizer,
uranium, plutonium, and palladium. India exports $5 billion worth of goods to
Russia, compared to $34 billion from the EU, $9 billion from Turkey, and $111
billion from China. Based on these figures, India’s tariff burden seems
disproportionate. So why is India being singled out?
Modi’s vision is to transform India into a “Developed
Bharat” by 2047—a global power built on American technology, financial aid, and
investment. For the past four years, the U.S. has been India’s largest trading
partner, with the trade balance favoring India. But in its quest for global
status, India picked a fight with Pakistan and ended up bruised. Trump now
claims credit for the Indo-Pak ceasefire that followed this misadventure.
India insists the ceasefire was a bilateral decision with
Pakistan. Pakistan, however, acknowledged Trump’s role and even nominated him
for the Nobel Peace Prize. Trump has taken note of Modi—who not only got
bruised by Pakistan but also kept posturing. By continuing to buy Russian oil,
India undermined sanctions. Positioned as a counterweight to China, India
stumbled—tripping over Pakistan and falling flat.
India’s trade volume with the U.S. stands at $132 billion,
with China at $127 billion, the UAE at $100 billion, and Russia at $68 billion.
Except for the U.S., all are BRICS members—where India plays the role of
America’s proxy. India is also trying to reduce its reliance on Russian arms.
But re-engaging actively with the SCO won’t be easy. Key SCO members may not
publicly criticize India, but behind closed doors, it’s likely to be the
subject of ridicule.
A future piece will explore how Russia has emerged as a
major player in cybersecurity. Many countries across the Middle East, Africa,
Asia, and Latin America are signing cybersecurity agreements with Russia—driven
by concerns over U.S. and European control and surveillance of data and the
internet.
Trump, observing Russia’s rise, has shifted U.S. policy.
Now, if a country has strong governance and control—regardless of its internal
systems, human rights record, or democratic credentials—the U.S. is willing to
engage. Regarding Central Asian states, Trump remarked that their governments
have ensured stability and peace, which is “good enough.”
Pakistan, though not mentioned earlier, clearly fits into
this narrative. It’s an active SCO member. Russia continues to invite Pakistan
to join the North-South Transport Corridor. Trump frequently references
Pakistan. So while India’s balance is off, Pakistan’s alignment is proving to
be a perfect fit.
BACKGROUND
India wakes up to a stark hard reality of US-imposed 50 per
cent tariff, the highest in the world, on its goods taking effect today.
The US Department of Homeland Security notified the hike in
tariffs on Tuesday. How will this impact Indian goods? Take a look:
The value of Indian merchandise exports to the US could drop
by 40-45 per cent in 2025-26.
The 50 per cent tariff will hit two-thirds of the exports by
value to the US. These include textiles and apparel, gems and jewelry, shrimps
and footwear, among others. Since these are labour-intensive sectors,
disruption threatens low-skilled jobs in India.
Notably, apparel hubs in Tirupur, Noida and Surat have
already halted production amid worsening competitiveness from low-cost rivals
like Vietnam and Bangladesh.
Not all goods will face the hiked tariffs. About 30 per cent of Indian exports will remain duty-free.
Has the ‘penalty’ impacted India's import of Russian oil?
The loading of Russian crude oil to India has slumped from the July levels.
However, Indian refineries attribute their lowering appetite for Russian crude
to shrinking discounts, not American pressure. A clearer picture will emerge
from the September-October data, when these shipments are discharged.
The uncertainty around global trade has also dampened
private capital investment in the country, and steep tariffs could drag
momentum on the performance of the government's Production-Linked Incentive
(PLI) schemes.
US Vice President J D Vance recently said that the secondary
tariffs on India were part of the "aggressive economic leverage"
aimed at forcing Russia to broker a ceasefire in Ukraine.
Impact
The impact of the US 50% tariff on the Indian economy would
be severe, affecting exports, jobs, GDP growth, and certain key sectors
significantly.
Exports
India exports about $86.5 billion worth of goods to the US
annually. Around $60.2 billion (66%) of these exports will face the 50% tariff,
making them much less competitive in the US market. Export sectors most
affected include apparel, textiles, gems & jewellery, shrimp, carpets,
furniture, leather, and footwear.
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