U.S. President Donald Trump recently added a complex layer to the economic relationship between the United States and India, threatening to impose additional tariffs on New Delhi due to its participation in the BRICS forum. This threat places India in a delicate position, especially as it races against time to finalize a beneficial trade deal with the United States—an agreement intended to provide relief from existing reciprocal tariffs. This development highlights the intricate dynamics of international trade relations and the geopolitical tensions that shape them.

The Looming Tariffs and Economic Context

U.S. President Donald Trump stated on Tuesday, July 8, 2025, that India could face an additional 10% tariff alongside other BRICS members, a bloc of emerging economies he has labeled “Anti-American.” This threat comes just a day after Trump indicated he was close to finalizing a trade deal with India, a deal New Delhi hopes would grant it reprieve from existing 26% reciprocal tariffs. These tariffs were initially announced by Trump on April 2, 2025, but were suspended for 90 days until July 9, 2025, and subsequently deferred to August 1, 2025. The baseline 10% American tariff continues to be effective on Indian goods. This warning was not isolated. The U.S. President followed it by unveiling a new round of levies, including a 50% rate on Brazil, effective August 1, 2025. This move is partly attributed to what Trump terms a “witch hunt” against former Brazilian President Jair Bolsonaro.

The letter to Brazil arrived just after a two-day BRICS summit in Rio de Janeiro, where leaders agreed on a joint statement criticizing trade-distorting tariffs. While Brazil and South Africa have separately blasted Trump for his comments, India has refrained from publicly responding, a sign that it is treading a fine line in maintaining its relationship with Washington. This restraint reflects the diplomatic delicacy required in the face of economic threats with strategic implications.

India’s Stance and Global Trends

Officials in New Delhi state they are not overly alarmed by Trump’s latest threats for now. According to them, the U.S. President’s view that BRICS seeks to undermine the dominance of the U.S. dollar does not align with India’s goals. The officials, who spoke anonymously due to the private nature of the discussions, clarified that India does not support moves for a single BRICS currency, and any participation in local currency trade arrangements is solely aimed at reducing operational and financial risks, not to provide an alternative to the dollar. India’s Ministry of Commerce and Industry did not respond to a request for comment. Senior Indian diplomat P. Kumaran said at a press briefing on Tuesday that Prime Minister Narendra Modi and his Brazilian counterpart, Luiz Inácio Lula da Silva, had “no discussion” on Trump’s tariff threats during the Indian leader’s state visit there. “We didn’t have an opportunity to discuss that,” Kumaran said, indicating a focused avoidance of public confrontation on this sensitive issue by the Indian delegation.

With India set to assume the BRICS chairmanship in 2026, it will need to differentiate itself from members like China and Russia, who seek to build the bloc as a stronger opposition voice to the U.S. India will bank on its strategic value and neutral currency stance to be treated differently by Washington. “Trump is unhappy with some BRICS members who have been talking about an alternate reserve currency,” said Mohan Kumar, a former Indian envoy and lead negotiator at the World Trade Organization, who now teaches at OP Jindal Global University. “India has time and again differentiated between local currency trade and de-dollarization and therefore doesn’t fall in that category.”

India-U.S. Relations: Challenges and Opportunities

India has been cultivated by several U.S. administrations over the years as a strategic partner and a key regional counterweight to an increasingly assertive China. As recently as April, U.S. Vice President J.D. Vance remarked that the fate of the 21st century “is going to be determined by the strength of the United States and India partnership.” However, those ties have recently come under strain after Trump took credit for brokering a ceasefire between India and Pakistan in May. Modi pushed back at Trump’s claims he used trade as a bargaining tool to secure a truce. The Trump administration has also made overtures to Islamabad, including its powerful army chief, in the aftermath of the conflict, a source of concern in New Delhi. This complex dynamic suggests that relations between the countries are not one-dimensional and are influenced by a wide range of factors.

Much rides on the success of the India-U.S. trade deal, which both countries have pledged to finalize by the fall of this year. Shashi Tharoor, an opposition lawmaker who has led India’s diplomatic outreach since the Pakistan conflict, said a trade deal would signify the strong ties between the two countries. “The relationship with the U.S. is in good shape,” he said in an interview in London on Tuesday. If the terms of the trade deal are agreed, “that will be a very, very healthy sign.” After months of talks, Indian trade negotiators have put forward their best offer to the Trump administration and are now awaiting a response. The latest tariff threats from Trump may also be a bargaining tool to secure more concessions from New Delhi. Trump has previously threatened to slap 100% levies on BRICS if they ditch the dollar in bilateral trade. “We need to distinguish between President Trump’s narrative and his action,” Kumar concluded. This statement suggests that public threats do not necessarily reflect the full diplomatic and economic reality, and a deeper examination of the intentions behind the words is required.

Conclusion and Outlook

The dilemma facing India with tariff threats from the Trump administration, alongside its efforts to sign a comprehensive trade agreement, reflects the growing complexity of the global economy. India aims to maintain its neutral stance on the dollar’s status while leveraging the benefits of cooperation within BRICS. New Delhi’s success in navigating these conflicting interests, as well as its ability to continue developing its strategic partnership with the United States, will be crucial for its economic future and its standing on the international stage. The long-awaited trade deal between India and the U.S. is not just a matter of tariff reduction, but a significant sign of the strength of bilateral ties and the ability to overcome disagreements. Against this backdrop, economic and geopolitical trends are expected to continue intertwining, shaping the future of global trade.