While the Indian market reels under US tariffs, a flurry of geopolitical developments appeared to change the tack of the country’s foreign policy narrative. India is currently facing an additional 25 per cent tariffs—a “penalty” for buying oil from Russia—set to come into effect on August 27.
In this context, all eyes were glued to the much-touted August 15 meeting between US President Donald Trump and Russian President Vladimir Putin, believing that a breakthrough on Ukraine would ease the additional tariffs. Nonetheless, this hope was dashed.
At the same time, the planned visit by the US trade negotiators to India later this month has been “halted” by the US for now, effectively pausing the India-US negotiations for a trade deal. The negotiations remain stuck over the US’s demand to gain market access for its agricultural products, while India insists on protecting the interests of its farmers.
While Indian goods are subjected to 25 per cent US tariffs that came into effect on August 7, the US and China announced that they have agreed to extend their 90-day pause on steep triple-digit tariffs against each other’s products. The US’s overtures towards China—the largest buyer of Russian oil—have prompted enough speculation.
Analysts argue that China’s economic strength enabled it to bargain hard. In addition to leveraging its control of the global rare-earth elements market, Beijing employed its power as an agricultural commodity importer.
Its import of farm produce from the US dipped from $13.1 billion during January-June 2024 to $6.4 billion in the first six months of 2025, prompting Trump to urge China to “quickly quadruple” its soyabean imports from the US.
India sticks to its multi-alignment policy
Such US overtures, specifically towards China, apparently undermined some of India’s strategic assessments. For instance, New Delhi has placed itself at the centre of the US’s Indo-Pacific strategy, primarily to contain an aggressive China.
However, Trump’s “sudden, inexplicable hostility toward India” coupled with the gestures towards China have cast doubt on New Delhi’s assessment, and reportedly prompted it to seek closer ties with Beijing.
In this context, it is noted that China has welcomed Prime Minister Narendra Modi to attend the Shanghai Cooperation Organisation (SCO) summit later this month in Tianjin. Prior to this, Chinese Foreign Minister Wang Yi is slated to visit India on August 18 for talks with National Security Advisor Ajit Doval.
However, the strategic affairs community in China has raised questions over New Delhi’s commitment to improve ties with Beijing, specifically as it comes against the backdrop of its economic and trade relations with the US, which are said to be at a low point.
It is underlined in China that India has always pursued a policy of playing both sides. For example, on India being a member of the SCO and the US-led QUAD security dialogue (with Australia and Japan), a Chinese scholar cited Prime Minister Modi’s previous remarks: “India has never considered itself bound to a single security alliance”.
However, scholars like Happymon Jacob, in his article titled ‘The Shocking Rift Between India and the United States’, published in Foreign Affairs magazine on August 14, argues that “India’s policy of multialignment has just undergone a geopolitical stress test and emerged rather winded. But Indian policymakers are not concluding that they should abandon it; to the contrary, they will fortify it.”
In this context, the Russia-India-China trilateral meeting could be a case in point, although Delhi has so far not made its stand clear on it. At the same time, Prime Minister Modi reiterated his stance to protect the interests of the country’s farmers, as he is slated to meet Trump next month on the sidelines of the United Nations General Assembly (UNGA) in the last week of September.
Meanwhile, the Indian market has started feeling the heat of the US tariffs, while the additional 25 per cent tariffs loom large.
Indian markets feel the heat
From India’s diamond trade, leather footwear, textiles and gems to shrimp farmers, all are bracing for the impact of the US tariffs. For instance, Trump’s latest decision to raise tariffs on Indian goods, hiking duties on leather footwear from 5-8 per cent to 25 per cent, with a further 25 per cent increase threatened by August 27, has made the shoe manufacturers in Agra nervous.
Similarly, India’s diamond trade is under duress, with reports saying that companies in the diamond hub of Surat had to put orders on hold. Notably, exports of non-industrial diamonds (suitable for jewellery or investment) make up 68 per cent of the total volume of the US’s diamond imports. The Gem and Jewellery Export Promotion Council has also said that 50 per cent tariffs would make Indian exports uncompetitive, threatening thousands of jobs.
Shrimp farmers in Andhra Pradesh, who make up 60 per cent of India’s shrimp trade, have echoed similar concerns, as they brace for the impact of US tariffs that will touch 59.72 per cent after Trump announced 25 per cent additional tariffs over and above the 25 per cent announced earlier, as well as the 5.76 per cent countervailing duty and 3.96 per cent anti-dumping duty.
Echoing the concerns of these manufacturers, former RBI governor Duvvuri Subbarao said that high tariffs imposed by the US on labour-intensive exports such as textiles and gems will deepen the jobless growth problem since a 50 per cent tariff threatens exports worth around 2 per cent of GDP.
While India grapples with such economic headwinds, the situation in West Asia has turned more volatile.
Burying the idea of a Palestinian state
Notwithstanding the widespread condemnation, Israel has continued with its relentless bombardment of Gaza as it plans to occupy not just Gaza City but also the West Bank, threatening to “bury the idea of a Palestinian state”.
The number of people killed around aid-seeking sites has reached 1,760 since late May, according to the United Nations human rights office, while Gaza’s Health Ministry states that over 61,000 Palestinians have been killed in Israel’s 22-month war.
Last month, Israel also announced its planned settlement in the E1 area, east of occupied East Jerusalem, which its Finance Minister Bezalel Smotrich said “buries the idea of a Palestinian state”. The proposed settlement in the West Bank would link the Ma’ale Adumim settlement with Jerusalem, effectively bisecting the West Bank.
Smotrich said the planned settlement, which would comprise over 3,400 homes for Israeli settlers on Palestinian-owned land, was being revived as a response to plans by other countries to recognise a Palestinian state, Al Jazeera reported.
The move has drawn scathing responses from the world over, including the UN, Saudi Arabia, Jordan, Germany, and the European Union, calling it a violation of international law that would fuel regional instability and erode the viability of the two-state solution.
The UN rights office spokesperson said the plan would break the West Bank into isolated enclaves and that it was “a war crime for an occupying power to transfer its own civilian population into the territory it occupies”.
According to Reuters, about 700,000 Israeli settlers live among 2.7 million Palestinians in the West Bank and East Jerusalem. The two-state plan envisages a Palestinian state in East Jerusalem, the West Bank and Gaza, existing side by side with Israel. All three territories were captured by Israel during the 1967 Arab-Israeli war, also known as the Six-Day War.
Meanwhile, Hezbollah has reacted angrily to the announcement made by the Lebanese government that it would seek to disarm the group by the end of this year. Hezbollah, seen as a key ally of Iran, said the Lebanese government “does not have the right to question the resistance’s legitimacy”.
Send your feedback and ideas to ashiya.parveen@indianexpress.com.
President Donald Trump greets Russia's President Vladimir Putin, August 15, at Joint Base Elmendorf-Richardson, Alaska. (AP Photo) 
Share
