US–India–Russia Trade Dynamics: Geopolitical Shifts and Potential Outcomes

By Paras & Company – August 2025

Introduction

Global trade flows are being redrawn in real time, with India finding itself at the intersection of economic opportunity and geopolitical friction. The latest trigger is the United States’ decision to double tariffs on Indian imports to 50%—the highest in the world—citing New Delhi’s continued purchase of discounted Russian oil. This move has rattled markets, strained diplomatic ties, and forced India to re-evaluate its strategic positioning between Washington and Moscow.

Trade Snapshot

US–India Trade:
In 2024, combined goods and services trade between the United States and India reached approximately $212.3 billion, with goods alone accounting for $128.9 billion. India maintained a significant goods trade surplus, while the US benefitted from a growing services surplus.

India–Russia Trade:
In stark contrast, trade between India and Russia has skyrocketed since 2022, driven largely by deeply discounted oil and fertilizers. From $13 billion in 2021–22, the figure surged to $68.7 billion in 2024, placing Russia among India’s top trade partners. Initiatives such as the Chennai–Vladivostok Maritime Corridor are now operational, solidifying logistical and economic ties.

Geopolitical Flashpoints

Washington’s Tariff Gambit

On August 1, 2025, President Donald Trump’s administration imposed a 25% tariff on Indian imports. Within days, this was doubled to 50%, directly targeting India’s energy trade with Russia. The White House framed this as a strategic pressure tactic to curb Moscow’s global oil revenue streams.

New Delhi’s Response

Calling the tariffs “extremely unfortunate,” India accused Washington and Brussels of “double standards,” pointing to continued EU–Russia trade. Prime Minister Narendra Modi quickly reaffirmed ties with President Vladimir Putin, stating that both nations would “deepen the partnership” in energy, defense, and infrastructure.

Strategic Realignment

This confrontation comes at a time when US–India relations had been strengthening to counterbalance China’s growing influence in Asia. The tariff escalation threatens to derail years of defense cooperation, with India temporarily pausing major American defense procurements.

Economic Fallout

• Market Volatility: Tariff news triggered a sharp rupee depreciation against the US dollar, a rally in gold and silver prices, and corrections in energy markets.
• Defense Disruption: India’s planned purchases of Stryker vehicles, Javelin missiles, and P8I aircraft have been put on hold.
• Political Pushback: Domestic industry groups warn of reduced competitiveness in US markets, while opposition parties question the government’s diplomatic strategy.

Possible Futures

Conclusion

The 50% tariff decision is more than a trade dispute—it’s a stress test for India’s foreign policy doctrine of “strategic autonomy.” As the US leans on economic coercion and Russia offers discounted resources and strategic depth, India’s challenge will be to navigate a path that secures its energy needs, protects its export markets, and maintains balanced relations in an increasingly multipolar world.

In the coming months, business leaders, investors, and policymakers will be watching closely—not only for the next round of tariff negotiations but for signs of whether India will tilt west, east, or continue walking its finely balanced middle path.