India's Hand In Trump Tariff Row Stronger Than It Looks

2025-08-16 02:01:28

(MENAFN- Asia Times) On August 6, US President Donald Trump signed an executive order doubling tariffs on most Indian exports to the United States, raising the rate from 25 to 50%. The decision, set to take effect later this month, was justified on grounds of trade imbalances and New Delhi's continued discounted purchases of sanctioned Russian oil.

The escalation marks the sharpest deterioration in US-India trade relations in decades. Prime Minister Narendra Modi has denounced the measures as“unfair and unjustified,” noting that other major buyers of Russian crude have not been penalized.

“We will protect our farmers and our domestic interests, even if we must pay a heavy price,” he told a rally in Gujarat in response to the tariffs.

Within days, India announced a pause on planned US defense acquisitions - a not-so-subtle signal that its strategic options extend far beyond the Pentagon's procurement lists. Senior officials have begun mapping out a menu of counter-moves, from limited retaliatory tariffs to deeper integration with BRICS partners and other non-Western economies.

To understand why India is in no rush to fold, it is worth taking stock of how the balance of power has shifted. First, BRICS itself has shaped into a US$32.5 trillion economic coalition after the addition of Egypt, Ethiopia, Iran, Saudi Arabia, the UAE and Indonesia.

The enlarged group now represents roughly 30–40% of global GDP and accounts for over a fifth of world trade. This is not yet a substitute for the G7 ($46.8 trillion), but it is a credible alternative pole.

Second, while the US dollar remains dominant, accounting for around 58% of global reserves and cross-border transactions, its share has been steadily declining, from 72% in 2000.

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