US-India Oil Trade Dispute Threatens to Trigger Broader Impact! 25 Years of Cooperation at Risk of Being Undone?

Analysts and officials say that US President Trump's harsh remarks on trade and Russian oil purchases regarding India could undermine two decades of diplomatic progress between the two countries and potentially hinder cooperation in other areas, as domestic political pressure is forcing both sides to adopt tougher stances.

India’s opposition parties and the public have urged Prime Minister Modi to respond firmly to what they describe as Trump’s “bullying” behavior.On Wednesday, Trump signed an executive order to impose an additional 25% tariff on Indian imports on top of the existing 25% tariff, citing India's large-scale purchase of Russian oil as the reason.

Although India has become a key partner of Washington in recent years, its huge trade surplus with the U.S. and close ties with Russia have made it a major target of this Republican president's global tariff offensive. Trump is attempting to exert pressure on Russia to reach a peace agreement with Ukraine.

Two Indian government sources stated that Trump's remarks about India potentially buying oil from its "longtime adversary" Pakistan were not well received in New Delhi. India also refuted Trump's repeated claims that he had used trade as leverage to end the recent military conflict between India and Pakistan.

This week, India issued an unusually strong statement accusing the United States of "double standards" on the issue of Russian oil imports, as the US continues to purchase Russian uranium hexafluoride, palladium, and fertilizers.On Wednesday, India called these tariffs "unfair, unreasonable, and unjust," and vowed to "take all necessary actions to protect its national interests."

However, sources indicate that New Delhi also understands,Any further escalation will harm interests beyond trade.

In recent years, including during Trump's first term, successive U.S. administrations have been cautiously nurturing relations with India. However, analysts say that Trump's recent actions may have brought the bilateral relationship to its lowest point since the U.S. imposed sanctions on India in 1998 due to nuclear tests.

Ashley Tellis of the Carnegie Endowment for International Peace in Washington said, "India is now caught in a trap: due to pressure from Trump,"Modi will reduce India's oil purchases from Russia, but he cannot publicly admit to doing so.He fears it may look like surrendering to Trump's pressure. We might end up in an unnecessary crisis, thereby undermining the hard-earned achievements with India over the past quarter-century.

Reuters reported that due to narrowing discounts and increased pressure from Trump, India's state-owned refineries have stopped purchasing Russian oil in recent days.

Analysts say,A more pressing challenge facing India is the clear divergence between India’s priorities on key issues and the political base of Trump.For example, work visas for technology professionals and offshore outsourcing services. For a long time, India has been the main beneficiary of U.S. work visa programs and outsourcing of software and business services, which has been a point of contention for Americans who have lost jobs due to cheaper labor in India.

Evan Feigenbaum, who served as a senior State Department official during the administration of U.S. President George W. Bush, warned thatThere is a risk that the relationship with India could become a "sacrificial lamb" of U.S. domestic politics.

He wrote: "Directly addressing India's issues is the most partisan and explosive issue in Washington."This includes immigration and deportation, H1B visas for tech workers, offshore production by American companies, and technology sharing and joint innovation with foreigners.”

Since the conclusion of the civil nuclear technology cooperation agreement in 2008, the two countries have deepened intelligence sharing and defense cooperation.Despite Modi maintaining good relations with Trump during his first term and later with President Biden, cracks have still appeared in the relationship.

In February this year, photos of Indian people being deported by the United States using military planes, with their hands and feet shackled, caused shock domestically. A few days later, Modi went to meet with Trump, attempting to avoid high tariffs.

At the end of last year, the United States announced that it had thwarted a plot related to India, which aimed to assassinate a Sikh separatist leader on U.S. soil. This incident has severely tested the relationship between the two countries. New Delhi denied any official connection to this plot. Former Indian diplomat and honorary professor at Jawaharlal Nehru University in New Delhi, Sukh Deo Muni, stated:"The credibility of the Modi regime has declined in the United States."

"Perhaps some believe that India or Modi must be 'brought back on track,' even if they cannot be 'taught a lesson.' If this trend continues, I am very worried that India will face strong challenges that will be difficult to handle," an Indian government source said. India needs to gradually repair its relationship with the United States while strengthening its engagement with other countries that were hit by Trump's tariffs and aid cuts.

India is currently in contact with Russia. Russian President Putin is expected to visit New Delhi this year. Last Tuesday, Russia stated that the two countries have discussed further strengthening defense cooperation in the form of a "special preferential strategic partnership."