Trump’s Tariff Shock And the Energy Equation: Why India Must Rethink Its Trade Compass
When Donald Trump announced a fresh 25% tariff on Indian exports starting August 1, it seemed like a revival of his old playbook—dramatic trade disruptions laced with political messaging. But buried beneath the noise of protectionism lies a deeper fault line in India–US relations: energy economics. The pressure isn’t just on Indian exporters; it’s on New Delhi’s energy decisions, its global trade priorities, and its long-term strategic autonomy.
Tariff as a Leverage Tool, Not Just Trade Friction
There is broad consensus among Indian policymakers that the new tariffs are less about trade imbalance and more about political leverage. Trump may not be in office, but his return to campaign rhetoric sends signals that Washington expects more from India—not just in defence partnerships or semiconductor collaboration, but also in energy.
And that’s where the real discomfort begins.
The United States is seeking not only greater market access but also larger energy deals—from LNG to crude to renewables. Washington’s expectation is clear: India must buy more American energy, and in doing so, deepen economic interdependence on terms favourable to the US.
This tilt is increasingly being tied to trade privileges. If India seeks a waiver on tariffs or a smoother trade path, it may have to sweeten the deal with larger contracts for US LNG, oil, and green technology inputs. In other words, energy is emerging as a bargaining chip.
India’s Energy Landscape and the Tariff Pressure
India has emerged as one of the fastest-growing energy markets in the world. The country is importing more LNG, investing in refining capacity, and expanding its renewable base. But these are choices shaped by pricing, diversification needs, and geopolitical realities—not political pressure.
Already, India has diversified its oil sources to include Russia, the UAE, Iraq, and the US. LNG purchases from the US have risen sharply over the last five years, but they still compete with more affordable Qatari and Russian supply.
By 2030, India is expected to double its natural gas consumption and add hundreds of gigawatts of green energy capacity. These are massive opportunities for all partners—including the US—but they cannot come at the cost of domestic flexibility.
If tariffs become tools to extract energy deals, India must ask a harder question: Are we being drawn into energy dependencies masquerading as trade diplomacy?
The problem isn’t trade; it’s the pattern
Strategic expert Brahma Chellaney has argued that US expectations from India are increasingly “one-sided”—with high tariffs on Indian goods still in place, demands for agricultural market access on the rise, and now, energy deals becoming quiet preconditions for trade engagement.
Energy coercion—where tariff relief or technology access comes with strings attached—may set a dangerous precedent. India’s energy security cannot be dictated by electoral politics in Washington.
India must stand its ground. Whether it’s defence imports or LNG terminals, strategic autonomy has to remain at the centre of policy. Bilateral trade cannot become a proxy battleground for energy geopolitics.
Rethinking trade diplomacy
Rather than reacting defensively, India must recalibrate. That means accelerating FTAs with energy-neutral partners like the EU, expanding its clean energy manufacturing base domestically, and pushing for multilateral reforms that prevent weaponisation of tariffs.
Energy must remain a space for cooperation, not coercion. The US can be a valuable partner—but not an exclusive one. New Delhi’s message must be clear: India will engage, but not at the cost of sovereignty.
Trump’s tariffs may dominate headlines, but the real story is about whether India can chart an energy strategy that is resilient, diversified, and free from external leverage. That will define not just our trade future—but our place in a changing global order.
