Political Analysis
American Unpredictability and its Consequences for Indian Foreign Policy

Introduction

Several terms have been used to define the new US administration’s foreign policy characteristics since President Trump’s inauguration in January 2025. ‘Protectionist’, ‘isolationist’, ‘unpredictable’ and ‘transactional’ are some of them. They were also associated with Trump’s distinct policy approach in his first term. From these, India will confront two intertwining challenges: one, the repercussions of protectionism as it relates to trade but also foreign policy in general; and two, navigating decision-making volatility and unpredictability. While India has an independent, even robust relationship with the US, the strategic dilemmas it may face are best understood in relation to major power competition between the US and China.

Unpredictable decision-making can hinder a country’s ability to assess potential impacts and prepare for fallout. This makes decisional clarity perhaps even more urgent than the decision itself. The concern thus is not merely the policies Trump may pursue, but the inherent uncertainty of what decisions could emerge and what might be overturned with little notice.

India’s first and most important set of tasks therefore is to seek clarity in the direction of policymaking; offer transactional ‘bargains’; and insulate, to the extent possible, one of its most consequential bilateral relationships—as well as its strategic autonomy—from future shocks. This includes ensuring continuity in the relationship carrying over from the Biden administration so that past gains are not reversed. That this is precisely what India appears to have learnt from previous engagements with the Trump administration is borne out by Indian Prime Minister Narendra Modi’s business-focused visit to the US within a month of Trump’s inauguration. Proactive diplomacy reflects India’s broader strategy. New Delhi will have to protect its interests by navigating several unknowns: between Washington potentially making trade concessions to Beijing or intensifying the trade war; between the US exacting tariffs on India (or not)—all while the US very likely heightens its military posture in the Indo-Pacific. 

Trade and tariff volatility

Trump 2.0 has begun with an array of decisions related to tariffs, some of which have been paused subsequently. The uncertainty of these decisions puts pressure on India to prepare for both their direct and indirect impacts. The direct impacts of volatile decision-making can still be assessed, thus making room for proactive Indian preparation, such as tariff relaxations in the union budget. The indirect impacts are more likely to put India and its policymakers in a fix. US policy could go in one of two directions, both of which will have indirect implications for India. One, that is the US-China trade war, could benefit India, while the other, which is a US-China trade deal, could put India on the back-foot. For now, there is no clarity on which option the US will choose.

While a gamut[i] of issues were covered in the Modi-Trump bilateral talks, discussions around trade and tariff made the most noise. Unfortunately, the visit did not yield much relief for India on tariffs. The US insisted on a reciprocal tariff, which means that there will be no concessions for India if India does not lower its tariffs for the US. The charges would thus be ‘reciprocal’. That said, the announcements on bilateral trade could relax India’s ability to manoeuvre the cloud of tariffs hanging over its head.

Despite calling India the “biggest abuser[ii]” of import tariffs and “tariff king,”[iii] the US has yet to announce tariffs on it, creating uncertainty about what to expect and what to prepare for. For its part, India decided to take preemptive action and advantage of the delay as demonstrated in its latest union budget. In a move to potentially address future volatility in US actions, the budget lowers tariffs[iv] on some imports from the US. For example, tariff reduction in the automobile sector—70 per cent over the earlier 125 per cent—will benefit Tesla and Harley Davidson, both US entities. This would have signalled to the US India’s readiness to accommodate its demands and negotiate on trade and tariffs. As a result and despite bilateral tension over tariffs, New Delhi and Washington have been able to set a bilateral trade target of USD 500 billion by 2030.[v] They have also agreed on a deal to facilitate more US oil and gas to India to bring down the trade deficit with the US. 

The US sees energy and defence sales as a negotiating tool to lower the trade deficit with India. India will likely welcome such sales to diversify its oil and defence market and reduce dependencies on Russia and the Middle East, though the final call will depend on pricing offers from the US. Such deals, however, take time to finalise, and in the meanwhile, India cannot be sure of what might hit it next given the see-saw of decisions that have come out of the White House since President Trump’s re-election. In the context of such uncertainty, would India be willing to compromise its relationship with Russia over energy and defence deals with the US? Is India willing to dial down its own protectionist stance despite having no clarity on whether tariffs may or may not be levied? Does Indian strategic debate sufficiently account for the impact of a potential long-term deal with the US involving F-35 fighter jets[vi] on its own indigenous defence manufacturing? 

Indirect volatility means US actions could go in diametrically opposing ways. China retaliated[vii] to Trump’s recent imposition of 10 per cent tariff[viii] with counter-tariffs on US imports. So on the one hand, from India’s perspective, if the US-China trade war intensifies, it could provide New Delhi with the benefits of trade diversion. Over the past few years, many US companies have already begun shifting their production base to India and other countries in Southeast Asia.[ix] Companies such as Apple Inc. have also begun expanding operations in India and going beyond assembly and sales.[x] If India plays its cards well and the US pushes through with a ‘China Plus One’ strategy[xi] such that companies avoid investing only in China, then India could play a significant role in global trade realignment[xii] and emerge as a winner in the US-China trade war, just as in Trump’s first tenure.[xiii]

On the other hand, in opposition to the benefits that India could accrue from major power trade war, is the possibility of the US cutting a deal with China,[xiv] which could impact India adversely, including its domestic trade and economy. On the plus side, a question worth asking is if India ceases to be as critical to US strategy in the region, would China be willing to relieve some stress on the border dispute with India? While India is an important strategic partner for the US for several reasons, the main justification for their increasing alignment is that both have a common adversary in China. If US-China relations become less adversarial because of accommodations made to China as a major US trading partner, India’s importance to the US will also diminish. 

Foreign policy unpredictability

As with trade, India could face broader foreign policy volatility in its relationship with the US. One of the most important would be on China as actions that protect US interests could destabilise Indian security. How India navigates this will therefore have implications for the India-US strategic partnership as well as India-China competition. New Delhi’s objective will be two-fold: leverage the partnership with Washington to counter Beijing but within reasonable limits, and balance the relationship with Beijing to deter actions that could be counter-productive to New Delhi. This will not be easy as India cannot afford to antagonise either.

The Trump administration is keen to refocus its diplomatic and military attention away from engagements elsewhere—primarily the Russia-Ukraine war—towards the Indo-Pacific, i.e. China.[i] If ongoing US attempts to strike a rapprochement with Russia and terminate its war with Ukraine are successful, it could help draw Moscow at least somewhat out of Beijing’s orbit. This would feed into the same big picture objective of eroding China’s growing influence. Various members of the Trump administration have further suggested that the US will go on the offensive against China.[ii]

The expectation therefore is that the ‘Indo-Pacific’ will recapture a lion’s share of the US foreign policy imagination. The first signal of India’s role in it emerged just a day after the presidential inauguration, in the form of Indian External Affairs Minister Dr. S. Jaishankar’s meeting with US Secretary of State Marco Rubio.[iii] While they reportedly discussed a “wide range of topics,”[iv] this meeting was symbolic for recognising India as a priority partner for the US; a lynchpin for US Indo-Pacific strategy. Rubio also hosted a foreign minister-level meeting of the Quad countries on the same day.[v] 

The Quad—consisting of Australia, India, Japan, and the US—is an instrument for “advancing a free and open Indo-Pacific region,”[vi] which is diplomatic speak for countering China’s vision of regional and global order. Though security is contained in its name (it is formally called the Quadrilateral Security Dialogue) it doesn’t have any significant security component—yet. This is also where India may face some volatility. 

India and the US are aligned on the Indo-Pacific strategy as both identify China as a principal challenge. This is welcome news for India, though with an important caveat. Where New Delhi and Washington have diverged in the past is over an overt military component for the Quad. Militarising the Quad would complicate India’s relationship with its geographical neighbour, the militarily superior China. These two nuclear-armed states share a territorial dispute, with the 2020 border standoff altering broader aspects of an already fragile relationship. 

New Delhi’s engagement under the ‘Indo-Pacific’ banner is intended to balance some aspects of its dynamic with China, in partnership with other states such as the US and through initiatives such as the Quad. US support is thus key for India’s ability to shape the region in its favour. That said, any escalation in US military power projection,[vii] especially under the Quad banner, will have knockdown impacts for India’s security and could curtail its ability to make calculated decisions. Why? For one, such actions will not only be seen as a threat by China but also India’s partners in ASEAN as they are similarly vulnerable to the destabilising impacts of major power competition. This is why even as the Australian, Indian, Japanese, and US navies have participated in a joint military exercise called Malabar since 2020, it is hosted at India’s initiative and is formally independent of the Quad. Clearly, such balancing is tricky and delicate. India has so far resisted a ‘securitisation’ of the Quad,[viii] with no clarity at this time on whether it can and will continue to do so.

Conclusion

India faces two emerging challenges from the new Trump administration in the form of trade and tariff-related volatility and broader foreign policy uncertainty. This is a delicate situation—it has to keep its partners close while also focusing on its own economic growth story. New Delhi is working to offset at least some of these challenges, though several others may be out of its control.

India has proactively addressed elements of trade and tariff volatility by reducing tariffs on certain US goods, thus signalling willingness to negotiate. An ambitious trade target and the likelihood of energy deals, such as increased US oil exports, have emerged as key discussion points. Despite these positives, the uncertainty of future US-China trade negotiations and India’s own position within this dynamic is going to be a long-term concern. While India may benefit from supply chain shifts as a result of the US-China trade war, a potential deal between the two could diminish India's strategic importance.

Similarly, broader foreign policy uncertainty is also a key issue. India and the US are aligned on countering China’s influence, but India’s strategic balancing act can be further complicated if the US seeks greater military power projection in the Indo-Pacific. Ultimately, India must manage its engagement with the US and China as skilfully as possible, without antagonising either, and while protecting its own interests.

Sources

[i] The Hindu Bureau (2025): Key takeaways from PM Modi’s U.S. visit: F-35 deal, Tahawwur Rana extradition, trade deals, and more, in: The Hindu, https://www.thehindu.com/news/national/modi-trump-meet-us-visit-key-takeaways-tahawwur-rana-extradition-f35-deal-trade-deal/article69218476.ece (17.2.2025)

[ii] Biswas, Sputnik / Inamdar, Nikhil (2025): India looks on nervously as Trump wields tariff threat, in: BBC, https://www.bbc.com/news/articles/cn93eyp5r2zo (5.2.2025)

[iii] Ibid

[iv] Dutta Mishra / Ravi (2025): India averts first of Trump’s tariff volleys; China, Mexico & Canada take the initial hit, in: The Indian Express, indianexpress.com/article/business/india-donald-trump-tariffs-china-mexico-canada-9813179/ (3.2.2025)

[v] TOI News Desk (2025): 'MIGA + MAGA = MEGA partnership': Key takeaways from PM Modi's US visit, in: Times of India, https://timesofindia.indiatimes.com/india/miga-maga-mega-partnership-key-takeaways-from-pm-modis-us-visit-donald-trump-tariffs-f-35-jets-26/11-accused-extradition-brics-illegal-immigration-india-china-energy/articleshow/118230540.cms (14.2.2025)

[vi] HT News Desk (2025): Donald Trump says US will sell F-35 stealth fighter jets to India, in: Hindustan Times, https://www.hindustantimes.com/india-news/donald-trump-says-us-will-sell-f-35-stealth-fighter-jets-to-india-101739490258866.html (14.2.2025) 

[vii] Rowlands, Lyndal / McCready, Alastair / Uras, Umut / Motamedi, Maziar / Kozul-Wright, Alex / Speri, Alice / Pietromarchi, Virginia (2025): Trump tariffs updates: China retaliates with levies against US, in: Al Jazeera, https://www.aljazeera.com/news/liveblog/2025/2/4/trump-tariffs-live-us-pauses-mexico-canada-tariffs-after-border-deals (4.2.2025)

[viii] Halpert, Madeline / Murphy, Jessica (2025): Trump agrees to pause tariffs on Canada and Mexico but not on China, in: BBC, https://www.bbc.com/news/articles/c87d5rlee52o (4.2.2025)

[ix] (2024): The rise and rise of ‘China Plus One’ risk strategies, in: Strategic Risk, https://www.strategic-risk-global.com/supply-chain-risk/the-rise-and-rise-of-china-plus-one-risk-strategies/1453004.article (10.9.2024)

[x] Mukerjee, Writankar (2024): Apple Inc sets up first subsidiary in India for R&D, in: Economic Times, https://economictimes.indiatimes.com/industry/cons-products/electronics/apple-inc-sets-up-first-subsidiary-in-india-for-rd/articleshow/115095502.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst (9.11.2024)

[xi] Kumar, Bhaswar (2022): What is the China-plus-one strategy? in: Business Standard, https://www.business-standard.com/podcast/international/what-is-the-china-plus-one-strategy-122072600052_1.html (26.7.2022)

[xii] Mathur, Somesh / Paul, Anusree (2025): How India Can Navigate Global Trade Shifts in Trump 2.0, in: The Diplomat, https://thediplomat.com/2025/02/how-india-can-navigate-global-trade-shifts-in-trump-2-0/ (6.2.2025)

[xiii] ET Bureau (2025): India stands to win US-China trade war, in: Economic Times, https://economictimes.indiatimes.com/news/economy/foreign-trade/india-stands-to-win-us-china-trade-war/articleshow/117924618.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst (4.2.2025)

[xiv] Swanson, Ana (2025): Trump Eyes a Bigger, Better Trade Deal With China, in: The New York Times, https://www.nytimes.com/2025/02/19/business/economy/trump-china-trade-deal.html (19.2.2025)

[xv] PTI (2025): Trump administration prioritising relations with India: former White House official, in: The Hindu, www.thehindu.com/news/international/trump-administration-prioritising-relations-with-india-former-white-house-official/article69209700.ece (12.2.2025)

[xvi] Crabtree, James (2025): Trump could make China great again, in: Foreign Policy, foreignpolicy.com/2025/02/18/trump-us-china-hawks-pivot-asia-pacific-europe-russia-nato/ (18.2.2025)

[xvii] Ministry of External Affairs (2025): External Affairs Minister Dr. S. Jaishankar met H.E. Mr. Marco Rubio, U.S. Secretary of State in Washington DC, in: Media Centre, https://www.mea.gov.in/newsdetail1.htm?13174/ (21.1.2025)

[xviii] U.S. Department of State (2025): Secretary Rubio’s Meeting with Indian External Affairs Minister Jaishankar, in: Office of the Spokesperson, https://www.state.gov/secretary-rubios-meeting-with-indian-external-affairs-minister-jaishankar/ (21.1.2025)

[xix] U.S. Department of State (2025): Joint Statement by the Quad Foreign Ministers, in: Office of the Spokesperson, https://www.state.gov/joint-statement-by-the-quad-foreign-ministers/ (21.1.2025)

[xx] Ibid

[xxi] Lamothe, Dan / Horton, Alex / Natanson, Hannah (2025): Trump administration orders Pentagon to plan for sweeping budget cuts, in: The Washington Post, www.washingtonpost.com/national-security/2025/02/19/trump-pentagon-budget-cuts/ (19.2.2025)

[xxii] Brunnstrom / David (2024): Indian foreign minister says does not share Ishiba vision for Asian NATO, in: CNBC TV18, https://www.cnbctv18.com/india/chronicle-of-conflict-the-india-china-border-dispute-from-1950-to-2024-19496332.htm (1.10.2024)

About the Authors 

Ruhee Neog is Director of the Institute of Peace and Conflict Studies (IPCS) in India. She studies Indian foreign policy and nuclear strategy. 

Prerana Priyadarshi is Senior Researcher and Deputy Director, Projects, at IPCS. She studies political economy with a focus on India.