On August 6, President Trump made good on his threat to raise tariffs on India, doubling them from the already punishing 25% baseline he announced only a week earlier. Washington’s tough talk on trade comes after a rocky few months in India-US relations, during which time President Trump repeatedly took credit for brokering a May cease-fire between India and Pakistan (despite strenuous diplomatic protests from New Delhi) and took the unusual step of hosting Pakistan’s army chief for lunch at the White House. All told, despite an early and energetic start to bilateral relations under Trump 2.0, including a Modi visit to DC and a Vance trip to New Delhi, urgent questions are now being raised about the trajectory of U.S. policy with India and across South Asia.
Stimson experts weigh in on these developments and their implications.
How is the latest trade news being interpreted in India, and in particular, how is it playing into an already fraught domestic political moment?
Akriti Vasudeva-Kalyankar: The common refrain in New Delhi when President Donald Trump returned to power in the United States was that it would be a net benefit for India. His investment in bilateral ties in his first term, camaraderie with Prime Minister Modi, and his tough stance on China, the argument went, would hold U.S.-India ties in good stead. The unraveling of U.S.-India trade negotiations is thus not just about economic ties, but a sign of deeper trouble in the broader relationship. Scathing editorials in the country’s papers are reading this steep raise in tariffs on India as tantamount to impinging on India’s sovereignty, overall antithetical to national interests, and even smacking of imperialism. Prominent opposition leader from the Congress Rahul Gandhi even added fuel to the fire by using President Trump’s comments about the Indian economy to attack the ruling Bharatiya Janata Party.
US-India watchers have long worried about the lopsided nature of the relationship, where the defense and strategic arms have overpowered the economic, especially in the past 15 years. The trade deal was meant to be a correction in this unsustainable trajectory, but legacy disagreements, such as over agriculture, have held back an agreement once again. Against the backdrop of rising US-India tensions over the past few months, especially with President Trump’s comments about U.S. mediation of the May ceasefire between India and Pakistan (a claim that New Delhi vehemently denies), these recent moves are being interpreted domestically as deliberately adversarial and designed to bring India in line.
However, despite clamor for showing strong resolve in these negotiations with the United States, Indian policymakers also understand the importance of a trade deal with Washington, which has eluded them for decades. Thus, even while the debate in parliament and public spheres continues, the government has quietly asked its ministries what concessions could be offered in the next round of talks at the end of the month, and there are reports that some oil refiners have already reduced purchases from Russia. The outcome will depend on who wins out in the Indian domestic debate — those who recommend pacifying Washington or those who recommend New Delhi stand its ground.
What does this news tell us about how the Trump administration is managing U.S. relations with India?
Elizabeth Threlkeld: Although the Trump administration’s policy toward India is still taking shape, Washington’s approach in the ongoing trade dispute signals a shift in policy priorities — one with significant long-term implications. Under recent administrations, including President Biden and even President Trump in his first term, strategic competition with China was a key impetus for deepening US-India defense and technology cooperation. Washington invested heavily in building closer ties with New Delhi on the premise both that India could usefully complicate China’s aims in the Indo-Pacific and that India was a partner worth engaging in its own right given its rising role on the world stage.
Trump’s second term began with seeming continuity marked by high-level visits and the rechristening of ongoing defense and technology initiatives. But rather than continuing to prioritize these areas of alignment, President Trump has instead increasingly focused on areas where the U.S. and India don’t see eye to eye. Issues including India’s policies on immigration, trade and market access, energy purchases from Russia, and multilateral engagement with China have come to the fore as irritants in the relationship. Indo-Pacific defense cooperation has receded in focus, and New Delhi has bristled at President Trump’s repeated claims of having de-escalated the May India-Pakistan conflict.
Many of these challenges are not new. Previous administrations, though, were willing to handle differences privately and not allow them to pull focus from longer-term geopolitical objectives. The Trump administration, in contrast, has repeatedly and publicly pushed back in support of foreign policy goals grounded in the U.S. domestic agenda — many of which run counter to India’s own domestic interests. President Trump has also broken with his predecessors in personally steering this policy shift, to include seeking concessions, with increasingly heated rhetoric, from a reticent New Delhi. While both sides’ populist leaders may yet reach a new modus vivendi grounded in their strong personal relationship, this moment represents a serious test of the strategic partnership’s resilience and ability to accommodate evolving policy priorities.
Many other states have escaped with lower tariff rates than India’s, including — it seems — Bangladesh and Pakistan. How do you interpret this development, and what will it mean for U.S. relations with India’s neighbors?
Asfandyar Mir: Pakistan and Bangladesh entered the tariff negotiations acutely aware of their economic vulnerabilities and the broader strategic stakes. Compared to India, which at least initially started the talks in March with self-assurance — bolstered by Prime Minister Modi’s early engagements with President Trump — Pakistan and Bangladesh were more cautious, each nursing concerns about the future of their bilateral ties with the United States. This prompted a pragmatic posture following Trump’s “Liberation Day” tariff announcement, with each country willing to accept trade adjustments to preserve — and where possible, deepen — relations with the United States.
Pakistan has arguably seen the most success. Its leadership leveraged President Trump’s interest in trade and high-level engagement — such as Field Marshal Munir’s lunch with Trump and diplomatic exchanges after U.S. mediation in the May 2025 India–Pakistan crisis — to focus on US–Pakistan commercial ties. Although full details remain limited, Pakistan has signaled broad openness to U.S. goods and services — especially imports like cotton and U.S. energy — and appears to have addressed at least some American concerns over non-tariff barriers to market access. In return, Pakistan secured a more favorable tariff rate than key competitors and, critically, received promises of expanded U.S. support beyond trade, including in oil exploration and critical minerals. Though still in early stages, the minerals sector is attracting growing American interest.
Bangladesh, meanwhile, initially faced tariffs as high as 37%, threatening over $8.3 billion in vital exports to the UnitedStates. Initially slow to respond, Bangladesh hit a setback in the form of a formal letter from President Trump noting his intent to continue tariffs. However, Bangladeshi negotiators acted decisively in subsequent rounds, offering concessions that appear to have addressed key USTR concerns. As a result, the tariff rate dropped to 20%. Though specifics remain opaque, Bangladesh likely agreed to new purchases of U.S. goods — possibly including Boeing aircraft, wheat, soybeans, LNG, and cotton.
Taken together, these outcomes suggest more than a shift in trade dynamics. They point to a recalibration in U.S. policy toward South Asia, rooted in bilateralism. Washington is treating its relationships with Pakistan and Bangladesh on individual terms, focused on maximizing American commercial benefits while offering reciprocal political and economic benefits. This marks a departure from the Biden years, when U.S. engagement was shaped by broader frameworks, such as the Indo-Pacific strategy that sought to promote India’s regional leadership, and relations with Pakistan and Bangladesh were not a priority.
India and the U.S. have lived through ups and downs in the past; how should we assess this moment in the wider context of the relationship and its trajectory?
Dan Markey: Relations between the United States and India since 1947 have indeed been punctuated by periods of goodwill along with stretches of disagreement and friction. This history offers important context for the last quarter century, which has mainly seen a stepwise improvement in ties, marred only by infrequent and relatively minor setbacks (like the Khobragade incident) that were quickly overcome by a mutual commitment to enhanced strategic partnership.
As the US-India relationship enters newly choppy waters, the question is whether the backsliding is merely momentary and soon to be followed by reenergized cooperation, or instead, reflects fundamental disagreements that will lead Washington and New Delhi into a sustained period of backsliding.
Given the many ways in which the present moment is a direct consequence of President Trump’s personalized and unpredictable policymaking process, most analysts, policymakers, and investors — especially those who have placed big bets on US-India commercial and defense ties — will surely hold on to the hope that Washington and New Delhi are only one trade deal, possibly even one Truth Social post, away from renewed harmony. This view has some merit, as the geopolitical and economic logics of US-India cooperation — topped by mutual interests in counterbalancing China and unleashing the potential of critical and emerging technologies — will not be undone overnight.
That said, the Trump administration’s ambiguity on China policy, fixation on rewriting the rules of global trade, retreat from leadership of a liberal world order, warming ties with Pakistan, and attempts to strong-arm other world leaders — including allies and close partners like Narendra Modi — all radically increase the chances that US-India relations could fall victim to a broader geopolitical realignment. Washington’s upending of the international chessboard will make it much harder — if not yet impossible — to manage the headwinds that faced US-India ties before Trump returned to power, including India’s aspirations for independence and great-power status, strategic hedging and longstanding reluctance to ally with any other power, and increasingly aggressive diplomatic and security strategies pursued by the Modi government.