Tariffs tested India’s diplomacy amid uncertain global outlook

“Politics increasingly trumps economics. Decisions are now being made not merely on cost, but on ownership and security…Faced with such pulls and pressures of globalisation, fragmentation and supply insecurity, the rest of the world responds by hedging against all contingencies. Even as it engages the US and China directly, choices are avoided where feasible and choices are made when beneficial.” With these remarks in Kolkata on November 29, External Affairs Minister Dr S Jaishankar offered perhaps the clearest articulation of the international churn that defined India’s diplomacy in 2025.

The year was marked by fractured alliances, revived power politics, punitive tariffs and the sobering realisation that even strategic partnerships have hard limits.

The EAM warned that the world was growing “less rule-bound and more fragmented”, where the US, which has long been the underwriter of the global order, was setting “radically new terms of engagement”, even as China continued to play by its own rules. For India, the year proved how real these shifts are, not just across negotiating tables, but during moments of acute security stress.

The most jarring diplomatic moment of 2025 unfolded during Operation Sindoor, when India launched calibrated military action in response to Pakistan-sponsored terror escalation. While New Delhi maintained that its actions were precise, proportionate and non-escalatory, the crisis exposed the limits of strategic convergence with Washington.

The US publicly positioned itself as a crisis manager, with US President Donald Trump first announcing a ceasefire between the two nuclear-armed neighbours and later repeatedly claiming that his administration had “stopped a war” between India and Pakistan. Trump’s remarks were privately viewed in New Delhi as diplomatically unhelpful and strategically misplaced.

Discomfort deepened when Trump hosted Pakistan Army chief Field Marshal Asif Munir at the White House, a move seen in New Delhi as a clear signal that Washington was once again prepared to re-engage Rawalpindi even as it remained on India’s list of principal sponsors of cross-border terrorism.

India made it clear that it neither sought nor accepted any third-party mediation, and all communication during the five-day skirmish with Pakistan remained strictly bilateral. However, the episode revived long-standing concerns in New Delhi about the US tendency to balance India and Pakistan during times of crisis.

Tariffs, ties with US

Meanwhile, trade disputes tested the economic foundation of the India-US relationship in 2025 as the year saw the Trump administration impose punitive tariffs of up to 50 per cent on a wide range of Indian exports, citing trade imbalances and domestic considerations.

The measures included an additional 25 per cent levy linked to India’s continued purchases of Russian oil, a move that New Delhi viewed as an attempt to use trade policy to enforce geopolitical alignment.

India strongly pushed back, describing the tariffs as “unfair, unjustified and unreasonable”, and warned that such unilateral actions risked disrupting supply chains and hurting labour-intensive sectors at a time of global economic uncertainty.

Yet, even as the tariff war intensified, Trump repeatedly described Prime Minister Narendra Modi as his “true friend”, underscoring the paradox that came to define ties in 2025 — sharp economic friction running alongside sustained political outreach. Negotiations for a bilateral trade agreement between the US and India continued through the year, although progress remained uneven.

Commerce and Industry Minister Piyush Goyal recently said talks with the US had reached an advanced stage, noting that Washington viewed New Delhi as a “trusted partner”. He maintained that strategic and economic cooperation between the two countries continued to broaden despite volatility in global trade and politics.

Trade frictions were compounded by a sweeping shift in the US immigration policy that sent ripples through India’s technology and professional workforce.

In September, the US President imposed an annual fee of $1,00,000 on H-1B visas, a dramatic increase from the earlier charge of around $2,000. The proclamation, signed on September 20, was described as one of the most consequential changes to the US immigration system in the recent years.

The order labelled the alleged H-1B visa abuse a “national security threat”, citing concerns over fraud, money laundering and organised crime involving outsourcing firms. The move was widely seen as part of a broader effort to restrict foreign labour and prioritise domestic employment.

The fee hike had an immediate and significant impact on India as Indian nationals account for nearly three-fourth of all H-1B visas issued, making the programme a critical pathway for Indian technology professionals, engineers and researchers. The steep fee hike has since emerged as a major barrier to entry, forcing companies and workers to reassess hiring plans, relocation decisions and long-term career strategies.

India’s Ministry of External Affairs said both Indian and American industries had a shared stake in innovation, competitiveness and talent mobility, and indicated that consultations between stakeholders were expected to address the implications of the policy change.

DISCLAIMER:                                                                                                                                                                

The views expressed in the Article above are Author’s personal views and kashmiribhatta.in is not in any way responsible for the opinions expressed in the above article. The article belongs to its respective owner or owners and this site does not claim any right over it.                 

Courtesy: The Tribune -24-Dec-2025