Contours of Cooperation
Trade winds rarely blow steady; they shift, stall, and sometimes strike with sudden force. For India and the United States—two nations whose destinies are increasingly intertwined—the latest squall has come in the form of punitive tariffs. Beginning August 27, Washington’s steep 50 per cent duty on a wide array of Indian goods has rattled exporters, especially in labour-intensive industries like textiles, gems and jewellery, leather, and machinery. The anxiety is palpable: orders are being renegotiated, US buyers are pressing for deep discounts, and livelihoods that depend on cost competitiveness now hang in the balance. Economic think tanks warn that nearly two-thirds of India’s $86.5 billion exports to the US stand exposed to prohibitive costs, with shipments potentially shrinking by tens of billions. Yet amid the turbulence, officials in New Delhi have called for calm, pointing to a 21.64 per cent jump in exports during the first four months of this fiscal year, and stressing that dialogue channels with Washington remain open. The moment, then, is one of disquiet but not despair—a reminder that in trade as in diplomacy, storms may rage but they seldom last forever.
The roots of this tariff dispute stretch beyond commerce, reaching into the realm of geopolitics. The Trump administration’s additional penalty, triggered by India’s purchases of Russian oil, complicates an already sensitive equation. US Treasury Secretary Scott Bessent’s remarks—that the India–US relationship is “very complicated”—reflect the paradox: warm personal ties between leaders coexist with recurring policy friction. For India, the imperative is two-fold: first, to protect exporters through immediate relief such as loan moratoriums, enhanced production-linked incentive schemes, and sector-specific support; and second, to accelerate diversification. Consultations with stakeholders across sectors and the fast-tracked Export Promotion Mission point in this direction. India is also preparing targeted outreach in 40 countries, particularly in textiles, where its current 5–6 per cent market share leaves vast room for expansion. By pursuing fresh trade agreements with the EU, GCC, Latin America, and Africa, India can turn adversity into opportunity, reducing overdependence on any single market. Diversification, if pursued with urgency, can blunt the edge of tariffs while creating a sturdier base for export growth.
Yet beyond the numbers and negotiations lies a larger truth: India and the US cannot afford to let trade turbulence eclipse the broader arc of their partnership. Bilateral trade touched $131.8 billion in 2024-25, cementing the US as India’s largest trading partner. This economic bond is reinforced by shared democratic values and converging strategic interests in an era marked by supply chain fragility and the rise of China. For Washington, punitive tariffs may offer tactical leverage but risk alienating a partner indispensable to its long-term vision in Asia. For New Delhi, the moment demands not only defensive measures but also a confident assertion of its role as a reliable, diversified supplier to the world. The story of India–US ties has always been one of resilience: each quarrel, however sharp, has given way to reconciliation anchored in larger strategic realities. This latest episode will likely be no different. What matters now is that both sides harness diplomacy and pragmatism to steer past the storm. If they do, the turbulence of today will be remembered not as rupture but as reminder—that partnerships of consequence are tested not in calm seas, but in their ability to weather the fiercest gales together.
