India-US spat over trade and oil threatens wider fallout

India-U.S. spat over trade and oil threatens wider fallout in international trade supply chain. U.S. President Donald Trump’s recent criticism of India over trade and its continued oil imports from Russia is raising concerns among analysts and officials, who warn that it could unravel nearly 20 years of diplomatic progress between the two countries. India’s opposition parties and many citizens are pressuring Prime Minister Narendra Modi to respond firmly to what they view as aggressive tactics. On Wednesday, Trump signed an executive order imposing an additional 25% tariff on Indian imports on top of the existing 25% citing India’s significant oil purchases from Russia. 

While India has become a key U.S. partner in countering China’s growing influence, its large trade surplus with the U.S. and strong ties with Russia have made it a focal point of Trump’s broader tariff campaign. Trump’s remark that India could buy oil from rival Pakistan further inflamed tensions, according to Indian government sources.

India rejected Trump’s claims that he helped resolve a recent India-Pakistan conflict using trade leverage, and issued an unusually strong statement accusing the U.S. of hypocrisy criticizing India’s oil purchases while continuing to import Russian materials such as uranium, palladium, and fertilizer. India called the tariffs “unfair, unjustified and unreasonable,” and vowed to defend its national interests.

Despite the harsh rhetoric, Indian officials acknowledge that escalating tensions could hurt broader cooperation with Washington. Unlike China, India lacks major strategic resources like rare earths to use as leverage in negotiations.

For years, U.S. administrations, including Trump’s first term, had worked to strengthen ties with India as part of a long-term strategy to counterbalance China. But Trump’s recent actions, experts say, risk reversing those gains, bringing relations to their lowest point since U.S. sanctions over India’s 1998 nuclear tests.