A high-level U.S. delegation that had been scheduled to visit India this week to launch the talks has cancelled the trip. Tensions between the two nations have escalated quickly due to new tariff starts. Intensifying the climate, U.S. President Donald Trump recently put a 25% blanket tariff on Indian exports. More enforcement responsibilities come into play on August 27. The decision is seen as a punishment of India for its continued purchase of Russian crude oil, adding to the already tense trade relationship.
Indeed, India’s cumulative tariff rate has now crossed 50%. This dramatic escalation stands today as one of the highest tariff increases the U.S. has ever invoked against any of its major trading partners. The United States enjoys a significant trade surplus with India, with nearly 20% of India’s total exports going to the US, further solidifying this important economic partnership. In the last fiscal year ending March 2025, India exported nearly $86.51 billion in goods to the U.S. This eye-popping number illustrates just how important their political and economic relationship is.
India’s government has expressed its alarm over the tariffs. In their view, the country is faring worse than it deserves in the current geopolitical environment. To date, the Indian Ministry of Commerce and Industry has not publicly communicated any reason for the cancellation of the visit. Similarly, we’ve not seen any comments from the Office of the U.S. Trade Representative.
India has fought back against Western nations’ apparently hypocritical stances, especially concerning their own trade with Russia. The Indian foreign ministry remarked,
“It is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion [for them].” – India’s foreign ministry
The cancellation of the trade talks, scheduled from August 25 to August 29, had been expected. This cancellation will further push back good faith conversations that might have started to mitigate animosities. It continues a worrying trend of deteriorating bilateral relations between the U.S. and India over restrictive trade policies and geopolitical actions.
This development raises alarm bells for big-picture prospects of U.S.-China collaboration in coming years. India needs to do business with Russia to secure vital oil and military supplies, all while navigating a new global regime of sanctions and trade disruption. As the world’s largest exporter to India, any protracted conflict could impact both nations’ economies.