*** 8/27/25 - Humiliation, vindication—and a giant test for India - Trump has triggered a trade and defence crisis: how should Modi respond? + 9/3/25 - How Modi Is Sending Trump a Message
Buzz Sawyer
"Put differently, India wants to strengthen its presence in the Indo-Pacific and increase engagement with the West and Southeast Asia, and perhaps a post-Trump America. So this is a temporary hiccup—Indians will be unhappy, anti-Americanism will once again grow within the country’s strategic elite, and stories of American betrayals will persist for years.
But none of this will alter India’s grand strategic course. Delhi’s commitment to multialignment—maintaining cordial relations with all major players in the international system—has only been strengthened by Trump’s hardball approach."
Humiliation, vindication—and a giant test for India
Trump has triggered a trade and defence crisis: how should Modi respond?
IT IS UNUSUAL to experience humiliation, vindication and a defining test all at the same time. But that is India’s predicament today. President Donald Trump has undone 25 years of diplomacy by embracing Pakistan after its conflict with India in May, and now singling out India for even higher tariffs than China. He cannot have thought through how the world’s most populous country and fifth-largest economy would react.
Narendra Modi, India’s prime minister, recently laid out a path for a muscular, more self-reliant nation. He is also about to meet Xi Jinping in China, after a bitter four-year Sino-Indian military stand-off in the Himalayas. For America to alienate India is a grave mistake. For India it is a moment of opportunity: a defining test of its claim to be a superpower-in-waiting.
Mr Trump’s humiliation of India comes in two flavours. On August 27th, after condemning it for buying Russian oil, America’s president imposed a 25% tariff surcharge, on top of the existing 25% import tariff on Indian goods. Buying Kremlin crude is grubby. But given that India does so through a price-cap scheme run by the West, that it sells refined petroleum products to Europe, and that much of the world, including China, also buys Russian oil, the surcharge makes it look as if India has been singled out for special punishment.
The other humiliation is Mr Trump’s love-in with Pakistan. After a terrorist attack in India that Mr Modi blamed on Pakistan, the two rivals fought a four-day skirmish in May, involving over 100 warplanes and raising fears of a nuclear clash. Yet Mr Trump is now exploring crypto and mining deals in Pakistan. He has dined in the White House with Field-Marshal Asim Munir, its hardline army boss and de facto ruler, who is proposing Mr Trump for a Nobel peace prize. America has offered to mediate over disputed Kashmir, breaking its own long-standing position and an Indian taboo.
America’s failure to support India on a core security interest and decision to punish it over trade have shattered trust among Indians. Since 2004 American presidents have welcomed India as a rising democratic power opposed to Chinese domination of Asia. Its $4trn economy and $5trn stockmarket dwarf those of Pakistan, wracked by instability, debt crises, terrorism and dependence on China. This is a giant own-goal for America’s interests that compounds its neglect of NATO in Europe.
That explains the second emotion among some in India: vindication. Since independence in 1947, India has avoided alliances, although the label it uses has changed from “non-alignment” to “multi-alignment”. It relies on Russia for some weapons, and on Europe, Israel and America for others. China supplies manufacturing inputs; the West tech and markets.
In 2020, however, when relations with China went into a deep freeze after the border skirmishes in the Himalayas, some in Washington hoped this might presage a quasi-alliance with America. Intelligence has been shared, and joint US-India military exercises, which also included Japan and Australia, led to a strategic deal in 2024 on closer defence ties.
Indians sceptical of global entanglements feel vindicated by the events of the past few months. As they always warned, dependence on America is dangerous. Mr Modi’s visit to China is meant to signal that India has options.
Humiliation and vindication pose a test of India’s capabilities and resilience. For 11 years Mr Modi has pursued nation-building, modernisation and centralisation. There have been setbacks. An industrialisation drive has had modest results and failed to produce the new jobs India needs. The education system is poor. Mr Modi often lapses into Hindu chauvinism.
But there have also been successes. New roads and airports, and digital payments and tax platforms, have created a giant single market. The financial system is stronger, with deep capital markets built on domestic savings, a nearly balanced current account and prudent banks. India is now less likely to attract supply chains as part of a “China plus one” boom, but all this will help it weather the trade shock. Growth is expected to remain above 6%, making it the world’s most dynamic big economy and, the IMF says, its third-biggest by 2028.
The danger is that America’s aggression revives slumbering autarky and anti-Westernism. In his Independence Day speech from the Red Fort in Delhi on August 15th, Mr Modi emphasised more self-reliance. But were India to go further and turn inwards, it would threaten its services industry, which now exports almost as much as all other sectors put together. Its tech-services firms make at least half their sales to American customers, including blue-chip firms with “global capability centres” in India. The country is OpenAI’s second-biggest market by users. And to industrialise faster, India needs more machinery imports and inputs from China.
Better for India to try to limit the damage. It should make rational concessions, including cutting tariffs and buying less Russian oil and more American natural gas. America and India still have enduring bonds, not least a huge diaspora. Mr Modi is right to go to China: boosting India’s manufacturing will mean closer trade links in the next decade, as well as American tech. He should seek new trade deals, adding to recent ones with Britain and the United Arab Emirates.
Look out to look in
A second priority should be reform at home. India’s fate—and its choice—is to be independent. Size and dynamism matter more than ever, to secure better terms in deals, pay for defence and raise living standards even if world trade slows. India has been waiting for several years for more big-bang reforms, including deregulating business, reforming the courts, and modernising agriculture, land and power distribution.
Many of these require co-operation between India’s states and the central government. Encouragingly, Mr Modi has just said he will simplify the goods-and-services tax and deregulate the economy, emphasising “Next Gen Reform”. After 11 years in office, he needs to go further and faster. To confront India’s deepest internal challenges has always been in its national interest. In a hostile world, it is also the best defence. ■
How Modi Is Sending Trump a Message
Washington surely took note. For over two decades, New Delhi’s foreign policy had shifted toward closer ties with the U.S. and the West, and gradually away from Russia. India had opened up economically to the U.S. and overcame its long-running reservations about deeper defense ties, joining The Quad alliance in 2007, and participating in joint military drills with America. But then came a reportedly tense Modi-Trump phone call in June and 50% tariffs last month, among the highest U.S. levy on any nation.
Putin is scheduled to visit India later this year, and the mood in Delhi is filled with an overdose of optimism toward Russia and China. But it would be a mistake to see this as the emergence of a new India-China-Russia geopolitical bloc, rather than a carefully crafted warning to the Trump Administration that bullying will be met with resistance.
Delhi’s three choices
When President Donald Trump first lashed out against India, Delhi had three options to choose from: submit to his pressure, do nothing, or implement a mix of symbolic and substantive measures and wait for the storm to pass. Option one would have required Modi, like his counterparts in Japan and Europe, to visit Washington and appease Trump. In this case, by winding down the purchase of discounted Russian oil, the purported reason for the sweeping tariffs. Had Modi chosen to do that, it would have had significant domestic political implications for his hyper-nationalist party, showing India as a country lacking the stomach to stand its ground. There is a perception in India that it has been unfairly targeted, given that Europe also buys Russian energy, and China even more, but faced no consequences.
Read More: Modi Can't Afford to Cut Ties With Trump
The second option for Delhi was to do nothing. But this approach would have also had domestic political repercussions, with influential political and media figures as well as the opposition accusing the government of weakness—and thereby casting India in a poor light not befitting its desire to be a pole in a multipolar world. Doing nothing would also have run counter to India’s tradition of resisting U.S. pressure on the world stage. In any case, this option would have led to a lose-lose scenario, as inaction would have neither prompted Trump to reverse his measures nor have served Modi well domestically.
So Modi and his advisors chose the third option: taking a mix of symbolic and substantive steps, but essentially playing the waiting game to see if the trade spat blows over.
The pitfalls of a India-China-Russia pact
The scenes from the 2025 Tianjin Shanghai Cooperation Summit had an overdose of bonhomie and brotherhood among three of the world’s four most powerful nations. But the SCO is a China-centric group that reflects the country’s expanding geopolitical influence, including in South Asia. That rather stark reality is not lost on Delhi.
SCO is not a forum that Delhi wants to pin its strategic hopes on. It is a regional organization that India will remain a part of, without making it a major foreign policy focus. And there are still many obstacles to a lasting rapprochement between India and China, including a long-running border dispute that flared up as recently as 2020-2021. While Tianjin hasn’t led to a Sino-Indian rapprochement, the summit underscores the message that the next time the U.S. decides to enlist India’s help in containing China’s rise, Delhi may be harder to convince.
A similar logic applies to Delhi’s approach to Moscow. Although India has reduced its defense dependence on Russia in recent years, Delhi remains the largest importer of Russian arms and U.S. pressure will not quickly change that. The Indian foreign policy elite has only become more convinced of the importance of maintaining the Russia card in their broader relationship with the U.S., given Trump’s unpredictability.
Read More: How Modi Misread Trump
Ultimately, however, a Sino-Russian alliance against the U.S. is not where New Delhi wants to be. As for China, it remains India’s main strategic challenge—one that can only be addressed by balancing China’s rising power or by bandwagoning with it. The former is beyond Delhi’s current capacity, and the latter is not a course India is willing to pursue.
Put differently, India wants to strengthen its presence in the Indo-Pacific and increase engagement with the West and Southeast Asia, and perhaps a post-Trump America. So this is a temporary hiccup—Indians will be unhappy, anti-Americanism will once again grow within the country’s strategic elite, and stories of American betrayals will persist for years.
But none of this will alter India’s grand strategic course. Delhi’s commitment to multialignment—maintaining cordial relations with all major players in the international system—has only been strengthened by Trump’s hardball approach.