Prime Minister Narendra Modi and President Donald Trump on February 13, 2025, unveiled the ambitious US-India COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology). The joint statement pledged sweeping ambitions: a ten-year defence framework, new co-production deals, a “Mission 500” trade target of $500 billion by 2030, and a tech-industrial bridge via the “TRUST” initiative.
That story of exuberance and optimism, however, bears numerous dents as it faces a more fraught reality: by August 2025, the Trump administration slapped 50 per cent tariffs on many Indian exports — citing India’s continued purchase of discounted Russian oil and accusing New Delhi of playing both sides.
The “feel good’’ atmosphere and exuberance in India about PM Modi and President Trump enjoying a close and privileged partnership has faded away. There will not be another “Howdy Modi” or “Namaste Trump” event in either country in near future. The India-US relationship has landed on a sticky wicket.
In these contradictory moments lies the new India-US landscape: defined by grand strategic convergence, but strained by transactional shocks. The post-2023 era is shaping a relationship where lofty promises and sharp frictions now make adjustments to coexist.
According to recent statements and briefings of the Ministry of External Affairs (MEA), India has stood its ground and defended its position. The MEA said that India’s relations with the US have faced recent friction over trade tariffs and India’s energy imports from Russia, but the partnership remains broadly committed. Despite these differences, the MEA has highlighted continued cooperation in defence, trade, and strategic matters, including efforts to conclude a new trade agreement.
Recent high-level engagements during August-September 2025 include trade agreement talks: In mid-September, an Assistant US Trade Representative, Brenden Lynch, visited India for talks on a bilateral trade deal. The MEA noted that the discussions were “positive and forward-looking” with both sides agreeing to “intensify efforts” for an early conclusion.
2+2 Intersessional Dialogue: India and the US conducted a virtual 2+2 Intersessional Dialogue in late August 2025. During the meeting, officials discussed advancing a new ten-year defence framework, strengthening trade and energy security, and reaffirming commitment to the Quad grouping for a free and inclusive Indo-Pacific.
Following US President Donald Trump’s decision to impose additional tariffs on Indian goods due to India’s continued purchases of Russian oil, the MEA statement in August 2025 described these measures as “extremely unfortunate”, “unfair, unjustified and unreasonable”. The MEA reiterated that India’s oil imports are based on market factors and serve the energy security needs of its 1.4 billion people.
The “feel good’’ atmosphere and exuberance in India about PM Modi and President Trump enjoying a close and privileged partnership has faded away. There will not be another “Howdy Modi” or “Namaste Trump” event in either country in near future. The India-US relationship has landed on a sticky wicket
Despite the trade tensions, the MEA confirmed India’s commitment to the Comprehensive Global Strategic Partnership with the US, emphasising its strength in withstanding previous challenges.
During a September 2025 briefing, MEA spokesperson Randhir Jaiswal, commenting on H-1B visas and migration issue, reiterated that mobility partnership is an important pillar of the relationship. He affirmed India’s interest in promoting legal migration pathways while curbing illegal migration. Last month, in response to US concerns over India’s purchases of Russian military hardware, the MEA spokesperson stated that India’s defence sourcing decisions are based solely on its national security and strategic assessments.
On upcoming interactions, the MEA acknowledged the possibility of a meeting between Prime Minister Modi and President Trump on the sidelines of the ASEAN Summit in Malaysia in October 2025.
India had already navigated trade tension under Trump’s first term and the early Biden years. Yet the escalation in 2025 represented a fresh rupture. The US first announced a 25 per cent “reciprocal tariff” on Indian goods, only to escalate it to 50 per cent with a “secondary penalty” tied to India’s energy ties with Russia.
Indian exporters—especially in textiles, seafood, gems, and marine products—felt the blow directly. Analysts warned that up to 70 per cent of India’s US exports could be threatened.
New Delhi’s response was firm: it called the tariffs “unjustified and unreasonable,” defended its energy policy as a sovereign prerogative, and hinted at recalibrating defence procurements, though the Ministry of Defence later denied any formal halting of projects.
The timing lays bare the brutality behind it as India is pushing to raise trade volume, repair pandemic shocks, and attract investment under “Make in India” incentives. The tariff overhang risked chilling capital flows, export-led growth, and supply chain shifts. Even as economic confrontation looms, strategic cooperation endures — though not unscathed.
Defence and Technology: Deepening Despite Strain
The COMPACT declaration in February 2025 committed to advanced co-production of Javelin missiles, Stryker infantry vehicles, strengthened maritime surveillance, and deeper collaboration in AI, dual-use tech, and undersea systems.
Earlier, since 2023, India and the US had launched INDUS-X (India–US Defence Acceleration Ecosystem) to foster start-up partnerships, joint innovation, and cross- border defence R&D.
In early 2024, Washington cleared nearly $4 billion in drone and maritime surveillance systems for India, cementing how defence cooperation remains a strategic — not just transactional — pillar.
Joint exercises, too, have continued. In September 2025, Yudh Abhyas was held in sub-arctic Alaska, even during tariff tensions — with a focus on high-altitude and counter-UAS warfare. Naval drills in the Arabian Sea underscore that maritime security remains central to the partnership. Thus, while trade and tariffs dominate headlines, the defence architecture keeps evolving — suggesting that strategic trust has not been abandoned, only stressed.
One of the most acute sparks in the post-2023 period is energy and geopolitical alignment. India’s reliance on discounted Russian crude has drawn US ire and become the principal justification for punitive tariffs. Between 2022 and 2024, India’s oil imports from Russia ballooned: by 2024, India overtook China as Russia’s largest oil customer.
This shift is driven by India’s energy security imperatives — notably, to manage inflation, balance its import bill, and maintain fiscal stability. But in US eyes, it undercuts a unified front against Russia amid the Ukraine conflict.
India’s insistence on strategic autonomy means it will — not lightly — cede control over energy sourcing to external pressure. The 2025 tariff escalation underscores this tension: how far can the US penalise an emerging partner for choices it considers sovereign?
The post-2023 era also reveals how domestic US politics amplify the volatility of the relationship. Trump’s return to power brought back tariff brinkmanship, unpredictability, and a reduced cushion for diplomatic consultation.
Inside the US Congress, bipartisan voices have occasionally rebuked Trump’s heavy tariffs on India as being counterproductive. Some argue that penalising a democratic partner in South Asia damages broader US strategy in Asia.
On the Indian side, public and elite narratives have hardened. Media commentary and policymaker statements talk of trust deficits, de-risking from US supply chains, and deepening ties with alternate partners like the European Union, ASEAN nations, and —paradoxically — Russia and China in certain sectors.
Yet despite discord, India’s perception of the US remains broadly positive among elites and public opinion polls. The Indian diaspora’s political influence in the US continues to act as a buffer against wholesale breakdown.
The post-2023 phase is not a clean re-start. It is a messy rebalancing. Trump’s renewed tariffs reopened old wounds, but strategic imperatives have proven stickier than trade irritants. Whether India and the US can sustain a relationship that weathers both tariffs and trust deficits will define the next decade in Indo-Pacific geopolitics
Navigating Ahead: Can Strategy Overcome Tariff Shock?
If the post-2023 period is anything, it is a test: and the crucial question is, can India and the US manage a clash over economics while preserving their broader strategic alignment?
Three dynamics will matter most:
- Negotiating Stability, Not Capitulation: The bilateral 2+2 and COMPACT architecture might provide structured channels to negotiate recalibrations. India is unlikely to abandon its energy or sovereignty claims — but discrete concessions, selective relaxations, or phased tariff roll-backs may be possible.
- Supply Chains, Technology and Defence as Levers: Future cooperation in semiconductors, critical minerals, clean energy, AI, space, and defence co-manufacturing can offer mutual gains that might mitigate trade frictions. The TRUST initiative and INDUS-X are already signalling just such a pivot.
- Diversification and Strategic Autonomy: India will continue to hedge its position — not just with the US but across Europe, East Asia, GCC, and within BRICS. It will push for alternate markets and supply chain partners to reduce leverage disadvantages.
But it must also avoid sliding into transactionalism where every new deal is contingent on immediate payoffs — else the strategic fabric might fray.
In short, the post-2023 phase is not a clean re-start. It is a messy rebalancing. Trump’s renewed tariffs reopened old wounds, but strategic imperatives have proven stickier than trade irritants. Whether India and the US can sustain a relationship that weathers both tariffs and trust deficits will define the next decade in Indo-Pacific geopolitics.
Trump’s second innings in the White House has shaken the global order, giving way to a new volatility. It has also made India sit back and work out as to how to rebalance its strategic alignments.
–The writer is a senior journalist based in Delhi. The views expressed are personal and do not necessarily reflect the views of Raksha Anirveda
