The imposition of an additional 25 percent tariff by US President Donald Trump on Indian goods, effectively raising the total tariffs on Indian exports to the US to 50 percent, signals the worst crisis in US-India relations in the past two decades according to foreign experts like South Asia analyst Michael Kugelman.

This escalation stems primarily from India's continued imports of Russian oil, which the US claims pose a national security threat. Kugelman described the tariff move as damaging because it could undermine the multifaceted strategic partnership between the two countries despite existing shared interests and cooperation across various sectors.

The tariffs will come into effect 21 days after August 7, 2025, impacting almost all Indian exports except certain exemptions like electronics and pharmaceuticals. The US justifies the tariffs citing national security and foreign policy concerns, emphasising India's purchase of Russian oil as a key issue.

India has strongly criticised the tariffs as "unfair, unjustified and unreasonable," emphasising its need to ensure energy security for its 1.4 billion population and asserting it will take all necessary measures to protect its national interests.

The economic impact is expected to be severe, especially on labour-intensive sectors such as textiles, footwear, gems and jewellery, leather, chemicals, and seafood, which rely heavily on exports to the US. Indian exporters are unlikely to absorb such a steep 50% tariff, leading to an estimated 40-50% potential cut in US-bound exports, which could contribute to a GDP growth slowdown by as much as 0.6 to 1 percent according to various economic analyses.

From a geopolitical perspective, some experts see this as a double standard by the US since China, another major importer of Russian oil, has not faced similar tariff escalations, which might be attributed to President Trump's personal dynamics with Indian leadership compared to China. This has introduced an element of hypocrisy and heightened tensions in the bilateral dialogue.

Despite the current crisis, Kugelman and other analysts suggest there remains a possibility to salvage the bilateral relationship due to its complexity and the many parallel areas of cooperation that provide some insulation against shocks.

However, the tariffs and the associated rhetoric have already marked a significant deterioration in trust and cooperation, challenging India's strategic choices and potentially pushing it closer towards other global partners like Russia and China.

The new US tariffs raise significant challenges to the US-India trade relationship, with damaging economic and diplomatic implications.

India’s stance is one of defiance regarding its oil imports due to market and energy security considerations, while Washington views these imports as undermining its foreign policy and national security, triggering one of the most serious diplomatic tensions between the two nations in recent decades.

Based On ANI Report