U.S.–India Relations: What’s Going On Right Now

Post-Indian independence, the relationship between the United States and India has evolved from distant diplomacy to deep strategic alignment. Today, however, that relationship faces its most serious stress test in years. Here’s a look at how we got here — and what’s at stake.

A Brief History Before Obama

In the early decades after India’s independence, U.S.-India relations were polite but distant. During the Cold War (1947-1991), India chose to be a non-aligned nation, with close ties to the Soviet Union, while the U.S. leaned toward Pakistan. Moments of tension — like sanctions after India’s 1974 nuclear test — were common. This slowly began to change in the late 1990s and early 2000s, with the U.S. recognizing India’s growing economic and strategic importance in Asia.

The Obama and Biden Years: Partnership Deepens

Under President Obama, the U.S.-India relationship gained serious momentum. In 2010, Obama visited India and endorsed its bid for a permanent seat on the UN Security Council, an unprecedented move. The two countries signed billions in trade deals, expanded joint military exercises, and ramped up collaboration in cyber defense, clean energy, and counterterrorism. India was designated a “Major Defense Partner” in 2016, granting it access to advanced U.S. technology usually reserved for close allies.

President Biden continued on this path. His administration emphasized shared democratic values and partnered with India on global health (especially during COVID-19), climate goals, and Indo-Pacific security. The Quad — comprising the U.S., India, Japan, and Australia — gained renewed purpose under Biden, aimed mainly at counterbalancing China’s influence in the region.

The Trump Era: Personal Warmth, Policy Friction

When President Donald Trump first took office in 2017, he and Prime Minister Narendra Modi shared strong personal chemistry. But policy-wise, cracks began to show. Trump revoked India’s preferential trade status under the Generalized System of Preferences and frequently called India the “tariff king.” Still, the defense relationship remained strong, and the symbolism of “ Howdy Modi” and “Namaste Trump” rallies reflected strong diaspora engagement.

Things have taken a sharp turn since Trump returned to office in 2025.

Trump’s Second Term: Optimism Turns to Crisis

In early 2025, Prime Minister Modi visited Washington and the two leaders launched “Mission 500,” aimed at growing bilateral trade to $500 billion by 2030. A new 10-year defense partnership was announced, and India agreed to lower some tariffs and import more U.S. energy and goods.

But within months, talks collapsed.

President Trump has grown frustrated with India’s limited market access and ongoing oil imports from Russia. In July 2025, he imposed a 25% tariff on Indian goods. Days later, he doubled that to 50%, citing India’s “support for Putin’s war machine” through cheap Russian oil. Trump said India had “taken advantage” of the U.S.” and warned of more penalties to come. Currently, tariffs on Indian goods stand at 50%.

Economic and Diplomatic Fallout

The impact has been immediate. This sharp increase is expected to severely disrupt India’s export sectors, particularly textiles, gems and jewellery, handloom, carpets, and handicrafts, leading to widespread production cuts, order cancellations, and threats to livelihoods — industry estimates warn of up to 1 million job losses, notably in Rajasthan and Punjab.  

Credit rating agency Moody’s warns this may derail India’s manufacturing ambitions, trigger investor caution, and shave off 0.3 percentage points from India’s projected GDP growth (~6.3%) in FY 2025‑26. Morgan Stanley similarly forecasts a possible 0.4–0.8% GDP hit if tariffs persist without mitigation over a year. 

For the Indian diaspora, especially households in the U.S., the tariffs are already leading to real pressures: prices for staples like Basmati and Sona Masuri rice are set to rise by as much as 50%, potentially pushing consumers toward cheaper alternatives like Pakistani rice. 

The Indian government has responded by defending India’s right to energy security and refusing to be pressured into abandoning Russian oil, which remains crucial to keeping fuel prices affordable for Indian consumers. As of August 8, 2025, India has put a pause on the purchase of military equipment from the U.S. in retaliation. 

Where Things Stand Now

At the strategic level, the damage that began with Trump’s tariff war on India in his first term has now escalated to an economic war. Trust between the two governments has eroded rapidly. India has begun strengthening economic ties with BRICS nations and revisiting stalled trade talks with the European Union and Southeast Asia. The Quad, once a key pillar of shared U.S.-India interests, now faces uncertainty as New Delhi questions the reliability of Washington under Trump. Some observers believe the partnership can be salvaged - but only with serious, sustained diplomacy that respects both nations’ red lines and interests.