After returning to power as US President for the second term, Donald Trump began to take certain measures to, what he said, “Make America great again”. And we saw how he initiated operationalizing that agenda by helping Zionist Israeli rulers—his frontal brigade in the Middle East—to pulverize Gaza and virtually turn that land into a US colony and a tourist hub. Then he has moved US Naval fleet towards Venezuela to bully that country into submission and occupy its huge oil resources. And thereafter he suddenly announced to have brokered ceasefire between India and Pakistan after Indian PM Modi launched “Operation Sindoor” in stated retaliation to Pahalgam terrorist violence. While claiming to have imposed that truce, Trump described his use of tariffs as a measure to stop the Indo-Pak war and said it was “very effective”.
Tariff Game
Trump administration first imposed a 25% tariff on Indian goods on 1 August 2025. Trump was aware that the US is India’s largest export market and third-largest trading partner, with a total trade volume of $130 billion. Indian exports to US comprises goods, services, especially IT and business process outsourcing. In 2024, US goods imports from India totaled about $87.3 billion. On the contrary, US exports to India amounted to $42 billion, in the same year. So, US ran a trade deficit of $45.8 billion. Hence, raising the tariff was evidently intended to pressurize India to open up Indian market for American agricultural and dairy products. Accordingly, President Trump on 6 August signed an executive order imposing an additional 25% tariff on imports from India. US is also bent upon reducing India’s heavy dependence on Russia for oil and military hardware procurement. Total oil imports from Russia in the financial year ending March 2025 was 87.54 Million Metric Tonnes (MMT) while that from US was 5.45 MMT. Value of arms procured by India from US was of $ 1.67 billion while Russia exported arms amounting to $67.15 billion to India. Even the Brahmos missiles Indian rulers boast of and have started exporting to other countries is a result of joint development between India and Russia. Addressing this mismatch and in order to force India to reduce oil imports from Russia, Trump imposed additional 25% duty on Indian exports to that country on 6 August despite a US federal appeals court invalidating Trump’s use of the International Emergency Economic Powers Act to impose the 50% levy on select Indian exports.
Impact of This Huge Tariff Hike on India
The impact has been immediate on Indian textile and clothing exporters, for whom the US accounts for around a third of their sales. Roughly 70% of shipments to America are now at risk. Between May and October 2025, India’s exports to the US reportedly fell by nearly 29%, with labour-intensive sectors such as textiles. To keep the industry afloat, the Indian government has scrambled to soften input costs. One of the most controversial steps temporary was the removal—and then extension—of the 11% import duty on cotton, allowing duty-free imports through to the end of 2025. Obviously, this has been detrimental to the interest of the cotton farmers in India as they feared cheap imports arriving just before the domestic harvest would crush prices and livelihoods. On the other hand, the garment manufacturing corporates have been elated since they would be able to have cheaper input costs and scope for multiplying profit.
The buck does not stop here. US demands of India to allow evergreening of patents of herbal resources (the controversial practice of extending exclusive rights or market dominance over a known herbal product through minor modifications, without offering significant new therapeutic benefits. which are used for manufacturing medicines). In the context of the intellectual property rights, evergreening is a strategy, especially prevalent in the pharmaceutical industry, where companies obtain secondary patents on minor variations of a drug that is about to come off patent. If that demand of US is conceded, it would not only dismantle India’s world renowned generic drug ecosystem but push up medicine prices further. The US also seeks preferential access to India’s vast public procurement market, abandonment of digital service taxes, permitting unfettered cross-border data flows, and even sharing public data with US tech firms—undermining data localization efforts and national security of India. The Trump administration continues to push destabilizing cryptocurrency (a digital currency, which is an alternative form of payment created using encryption algorithms which need no banks or any other third party to regulate them—a new device of online speculation endowed by capitalism) crisis-ridden agenda, seeking regulatory leniency that could compromise India’s financial stability–all under the banner of “free trade.” It is a clear attempt on the part of US imperialist regime to weaponize trade for geopolitical leverage.
India Already Began Showing Leniency to US in Regard to Bilateral Trade
But it is not that so far US imperialists were inactive in penetrating deep into Indian market through various routes. And the Indian government was also allowing that. In the financial sector, openings are being created for American corporate interests under the guise of liberalization. The latest acquisition of Bengaluru-based fintech firm Axio by Amazon granting the e-commerce giant a direct lending license – is more than a business deal. In this way, India’s financial gateways are being pried open, even in areas critical to economic sovereignty.
Anticipating the aggressive posture of US government, India already began a graded compliance with US fiats. Union Budget 2025 26 lowered import duties on high capacity motorcycles for American brands like Harley-Davidson. On 13 February PM Modi-led BJP government slashed tariffs on American bourbon whiskey to 100% from 150%. Government of India has also reduced import duties on Washington apples, from 50% to 15%. There are also negotiations going on reducing tariffs on horticulture products like walnuts, cranberries and dairy. A recent study has found that “After accounting for PLI incentives and other concessions, real earnings from India’s exports of iPhones to the US are close to zero.”
To dilute the covert threat of possible tariff aggression plan, PM Modi had also dashed to Washington in early February last with a proposal of granting a slew of concessions to the US on trade, some already announced in the budget. But PM Modi’s much boasted “friendship” with President Trump did not scuttle the profit maximization move of the US monopoly houses and multi-nationals by making cheaper and increased forays into Indian market through pressure tactics implemented by Trump, their political manager.
India’s further posture of inking closer ties with US was evident when just 24 hours before Trump’s announcement of tariff hike, reports appeared that the Indian Air Force had recommended the government a preferred option for US F-35 stealth fighter jets as an interim platform until India could produce a fifth-generation Multi Role Combat Aircraft. The timing of the news report containing such Top Secret information was manifestly orchestrated to bring the seductive proposition to Trump’s notice before 1 August in a gentle reminder that it was he who personally offered F 35 stealth fighter to PM Modi during the latter’s February visit.
But all such overtures went in vain. Besides imposing steep import tariff, President Trump has also embarked upon visa rule as a part of a broader crackdown on legal immigration and implemented stricter vetting for H-1B skilled worker visas. Indian IT majors, such as TCS, Infosys, and Wipro, are deeply embedded in US-centric contracts and supply chains. The prospect of a hiring slowdown or even a hiring freeze from American clients has direct consequences. In fact, shortly after the visa restriction announcement, TCS laid off 12,000 employees, citing project delays and uncertainty in global demand. While no official link was drawn to Trump’s remarks, the timing is hardly coincidental. For thousands of young Indian engineers, particularly those emerging from non-elite institutions in smaller towns, the promise of a stable job in the IT sector is already under threat. And a steep hurdle is the US’s insistence on opening up India’s agriculture sector to it. Especially, US wants export of its genetically modified crops to India. In that event, it would have a serious bearing on 700 million Indian people engaged in agriculture.
List of US Demands is a Long One
Thus, though President Trump has literally made India’s arms purchases and oil imports from Russia the central planks of his India policy, his list of demands includes many more liberalizations by India. He seems confident he will be able to have his way with Modi-led BJP government. By threatening to punish India with high tariff, Trump is actually exerting pressure on it to incentivize US. Once the Indian government is coming along, he might, graciously hand out a few minor concessions, but that would be for the optics. And it would not be surprising if the BJP led Indian government were to hail it as success for Indian diplomacy.
India’s Response to US Tariff Hike is Conspicuously Muted
Yet the response of the Indian government to such tariff threats is curiously muted. There was no national address by the PM or any of his cabinet colleagues, no white paper, not even a press conference by the Prime Minister. Instead, the Indian citizens heard about India’s trade policy largely through Trump’s own proclamations and scattered off-the-record briefings from Indian officials. And then began hectic parleys. PM Modi hitherto pretended that his bonhomie with Trump is above diplomatic relation. But that bubble has burst with Trump unilaterally raising tariff. So, PM Modi opted for avoiding meeting Trump in person. He even consented to attend G-20 conference in South Africa only after Trump declared his non-availability for that conclave. Hence, Commerce Minister Piyush Goyal was sent to Washington for trade talks with the US, following which Trump claimed that India had agreed to lower tariffs. But the Indian government refrained from responding to, let alone confirming, any such claim. Then Commerce Secretary Rajesh Agarwal was assigned the job of negotiating deals with US in Washington. And then it was heard that India and the United States were scheduled to hold another round of trade talks in New Delhi. Noticeably, India’s stated ongoing trade negotiations with US are unfolding behind a veil of secrecy – sparking alarm over transparency, national interest, and the long-term cost of short-term concessions. While Commerce Minister Piyush Goyal has acknowledged a “dialogue” with US, he has offered no clarity on its scope or substance. On the other hand, the US commerce secretary, Howard Lutnick, argued that India needed to pursue a broad based rather than sector-specific reduction in tariffs on American imports. When told that rolling back tariffs on agricultural products would be a political setback for the Indian government, Lutnick responded that India’s agricultural market “has to open up, it can’t just stay closed.” So, US seems to continue its aggressive mode.
Augury of the Process of Capitulation
And meanwhile, the Indian government has rolled out its plan to slowly capitulate to US terms. The first tangible sign of capitulation came when India offered to buy an additional $10 billion of LNG/oil from the US. India has also diluted its nuclear liability law to let US companies set up nuclear power plants here. The decision to slash cotton import duties from 11% to zero has already been stated earlier.
As per media report, in case India capitulates to US dictates, India’s MSMEs which contribute to over 45% of India’s exports will suffer, Indian agriculture will face challenges at three levels – country level, product-level competitiveness loss, and increased non-tariff barriers. India’s GDP may take a massive hit upto 10 basis points. Trade Deficit may rise monumentally, and the Rupee will further weaken. If the US raises product tariffs further, it could severely impact India’s processed food exports (ready to eat meals, snacks), shrimps, cereal and dairy products which have been growing as part of India’s shift toward value added agricultural exports. And higher US tariffs could push cheap Chinese goods into India, harming local manufacturers. pharmaceuticals, and Textiles, auto components, medical devices face costlier realignments and supply chain disruptions.
Putin’s Hurried Visit to India
In the midst of Trump’s threatening posture that if India does not join its camp full-fledged, it might have to pay a heavy price including sanctions, Russian Prime Minister Putin arrived for a two-day visit to India for business negotiations. Because sale of oil and military equipment to India constitute major exports of Russia, which is hit by a labour shortage, it also sees India as a valuable source of skilled workers. So, Putin wanted to ensure that business tie-ups with India are not jeopardized because of US threat, particularly when, because of his war against Ukraine, Russia is now to a great extent isolated from the global economy.
On the other hand, though PM Modi in his usual populist gesture and projecting himself as a powerful global leader, embraced PM Putin on his arrival, he was expected to walk the proverbial diplomatic tightrope and show the Indians at home and in the wider world that he still counts Putin as his ally and has not given in to pressure from President Trump. Also, the ruling Indian monopolists have been judging his performance on the diplomatic front in so far as ensuring their business interests are concerned. In this context, PM Putin’s visit assumed more significance for PM Modi and his government than ever before because it was poised to test India’s geopolitical autonomy in view of the tariff policy of the US. PM Modi also was under compulsion to demonstrate that strengthening of India-Russia ties has not been overshadowing ongoing trade talks with the US and his partnership with Europe. With Indian oil companies already reducing oil purchases from Russia to avoid sanctions from US, India needed to explore other avenues to boost trade with Russia. In a word, for India, the challenge was to strike a strategic balance protecting autonomy while navigating pressure from US and dependence on Moscow.
But then it was seen that nothing tangible emanated from the bilateral talks save and except both India and Russia reaffirming their customary commitment to strengthen bilateral and multilateral cooperation to combat terrorism, transnational extremism, organized money laundering, crime, terrorist financing, and illicit drug trafficking. Both the Prime Ministers ended their talks stressing on continuing to strive for global peace and stability in a multipolar world and a multipolar Asia.
India is Tilted Towards US
As it is revealed, imperialist India, aspiring to be a global superpower, can hardly antagonize US. This aspiration of the ruling Indian monopolists cannot be fulfilled without the backing of US. India can by no means fulfil its aspiration by either ranking higher or the same as China, that is now a formidable imperialist power after counter-revolution, posing serious challenge to US supremacy. US knows that the Indian ruling class is frantically looking for a cemented global partnership with it. They also know that the publicized effusiveness of PM Modi, tasked to materialize the class need of the Indian monopolists for friendship with President Trump, the political representative of US imperialism, is aimed at that. Aware of this ambition of the Indian bourgeoisie and its desperation to hold hands with US, President Trump, as is ordained by the ruling US monopolists and multinationals, is obviously set to pursue the policy of extracting extra economic benefits from India by playing the tariff card.
On the other hand, PM Modi and his BJP government, the trusted servitors of the ruling Indian monopolists and multi-nationals, is trying to somehow come out of the tangle by frantic negotiations. The future would only tell where does the ball roll to. But what is apparent is the intensification of imperialist imperialist contradiction over market. One would recollect that when capitalist globalization was rolled out, it was claimed that there would be no tariff wall and the whole world would be like a global village.
But now Trump as the present spokesman of the US imperialists who alone mooted the concept of globalization, now says that “globalization does not exist”; rather, he is a prominent critic of the ideology of globalism. To keep it short, enmeshed in insolvable market crisis, world imperialism capitalism, despite all attempts, is unable to stave off the growing crisis. This tug of war between US and India over import tariff is a manifestation of that. By negotiating behind closed doors and releasing only vague statements about “mutual interests and sensitivities”, the Indian government is buying time— at the cost of transparency. Common toiling Indians need to imbibe this truth and realize that imperialism-capitalism is breeding all miseries and predicaments of their life and bourgeois leaders like PM Modi, whatever their personal or party agenda may be, are, ultimately articulating the vested class interest of ruling Indian bourgeoisie.
