The Collateral Damage of Geopolitical Friction: How Trump’s Ukraine Policy Reshapes Global Alliances and Trade, with a Focus on the US-India Nexus

 

In the intricate tapestry of modern geopolitics, the conflict in Ukraine stands as a central thread, pulling at the seams of established global alliances and economic norms. The return of Donald Trump to the American presidency has introduced a new, disruptive element, reframing the United States’ role from traditional guarantor of security to an unpredictable arbiter of transactional relationships. This shift has not only altered the strategic landscape of the European conflict but has also sent economic shockwaves across the globe, most notably destabilizing the burgeoning strategic partnership between the United States and India. This report provides a detailed analysis of the core tenets of the Trump administration’s doctrine on Ukraine, its application of economic pressure on key partners like India, and the cascading effects on global trade and diplomatic alignments.

 

Part I: The Core of the Trump Doctrine

 

 

The New Calculus of “America First”

 

The foreign policy of President Donald Trump’s administration is built on a foundation of “America First,” a philosophy that fundamentally reorients US engagement away from multilateral frameworks and toward a more unilateral, transactional approach. This marks a profound departure from the preceding administrations of Barack Obama and Joe Biden, which had actively sought to deepen and institutionalize partnerships through collaboration. For India, this earlier period was defined by a shared commitment to elevating the bilateral commercial and economic relationship. President Obama and Prime Minister Manmohan Singh, in 2013, had challenged their governments to reach the full potential of their partnership in areas including trade and investment, a sentiment echoed by President Obama and Prime Minister Narendra Modi in 2015. Over this period, two-way trade in goods and services surged from $19 billion in 2000 to over $100 billion by 2014, supported by various bilateral forums like the Commercial Dialogue and the Trade Policy Forum.

The current administration’s diplomatic tone is starkly different. As noted by former Secretary of State John Kerry, the new approach is characterized by “a little bit too much ordering, pressuring and pushing people around”. The Trump administration appears to operate from a belief that greatness is not demonstrated by constantly issuing ultimatums. This transactional mindset extends directly to the conflict in Ukraine. The President views the war not as a moral crusade but as a “disaster” that “would have NEVER happened if I was President”. His overriding objective is to achieve a swift resolution to halt the “bloodshed and destruction”. This perspective frames the war as a “stalemate that Ukraine cannot break,” necessitating a “rapid settlement” to avoid further casualties.

Central to this new calculus is the perception that the war is “not our war” but rather a conflict “on the other side of the world”. This perspective informs the administration’s attempts to disengage from what it considers to be financially draining commitments and to leverage American influence to compel European allies to bear a greater share of the burden. By prioritizing domestic interests and minimizing direct US involvement, the administration is reshaping the dynamics of the conflict and compelling allies to re-evaluate their own security architectures in a world where US support is no longer a given.

 

A “Peace Plan” of Concessions and Threats

 

The Trump administration’s diplomatic strategy for ending the Ukraine-Russia conflict is rooted in a transactional logic that has generated significant international apprehension. The central component of this approach is a peace plan that proposes major concessions from Ukraine. President Trump has publicly backed the idea that Kyiv should cede the Donbas region to Russia and relinquish its claim to Crimea in exchange for a peace settlement. This proposal stands in sharp contrast to the position of Ukraine and its European allies, who insist that international borders must not be changed by force. Ukrainian President Volodymyr Zelenskyy has firmly rejected this framework, stating that his country’s constitution makes it “impossible to give up territory or trade land”. He maintains that “real negotiations” must begin along the current front line, which he calls the “best line for talks,” and has expressed gratitude for the support of European leaders on this stance.

In a move seen as a potential breakthrough, a special US envoy has indicated that President Vladimir Putin has agreed to a “NATO-like” security guarantee for Ukraine. This proposal would allow the United States and its European allies to offer Ukraine “Article 5-like protection,” a concession described as “game-changing” and a potential workaround to Putin’s long-standing opposition to Ukraine’s NATO membership. However, the specific role of the US in this security force remains “unclear”. President Trump has explicitly ruled out sending US troops to help defend Ukraine against Russia, stating that the responsibility for a land force rests with European countries.

This diplomatic push is accompanied by a volatile and often contradictory public discourse. President Trump has defended his actions in fiery social media posts, labeling his critics “stupid people” and asserting that he knows “exactly what I’m doing”. While he has praised Putin’s willingness to engage in talks, he has also accused the Russian president of saying “a lot of bullsh–” regarding the war. This unpredictability has created a difficult situation for all parties. On one hand, Russian state media has shifted its rhetoric, turning on Trump for his “disrespectful tone” and accusing him of “Bidenization”. On the other, Ukrainian officials like President Zelenskyy have publicly struck a conciliatory note, stating that Trump has the “strength to force Russia into peace,” even while privately resisting his proposals. The entire process is a test of posture, with each side maneuvering for a strategic advantage.

 

The Lever of Economic Power

 

A defining characteristic of the Trump administration’s foreign policy is its reliance on economic power as a primary tool for achieving geopolitical objectives. This is not a new pattern. During his previous term, President Trump was accused of using military aid as leverage to pressure Ukraine’s President Zelenskyy into investigating his political rival. The House of Representatives’ subsequent impeachment charges were rooted in allegations that he withheld a congressionally-mandated military aid package to coerce a foreign government into interfering in a US election. This history establishes a clear precedent for the use of economic pressure in foreign relations.

In the current context, this strategy has evolved to include the use of tariffs as a form of proxy sanction. The administration is explicitly using the term “sanctions” to describe the additional 25% penalty it has imposed on India, a move distinct from the initial “reciprocal” tariff. This punitive action is justified under US trade laws like Section 232 (national security) and Section 301 (unfair trade practices), but its deeper purpose is to coerce India’s foreign policy posture and economic alignments. The use of economic measures as a weapon for foreign policy coercion is further underscored by the US Department of the Treasury’s sanctioning of six Indian firms for allegedly facilitating oil transactions with Iran. These actions, which include adding companies to the Specially Designated Nationals (SDN) list, effectively sever their access to the US financial system.

This approach marks a significant departure from traditional trade disputes, which typically focus on market access and duties. The new tariff regime is more indiscriminate, punishing sectors of the Indian economy—such as textiles, footwear, and gems and jewellery—that have no direct ties to India’s energy trade with Russia. This highlights a fundamental shift where trade policy is no longer viewed as a separate matter but is fully integrated with national security and geopolitical objectives. The tariffs are not merely a tax; they are a direct tool of statecraft, a punitive measure designed to influence behavior and signal that Washington’s partnership is conditional on alignment.

 

Part II: The US-India Trade Dispute: A Case Study in Collateral Damage

 

 

From Partnership to Punishment: A Swift Deterioration

 

The current trade friction between the United States and India stands in stark contrast to the decades of growing cooperation that preceded it. Under the Obama and Biden administrations, the bilateral economic relationship flourished. Two-way trade in goods and services grew from $19 billion in 2000 to over $100 billion by 2014, and surpassed $200 billion in 2023. This period was marked by a collaborative spirit, with bilateral forums like the Commercial Dialogue and the Trade Policy Forum working to resolve a wide range of policy issues and identify opportunities for growth. Indian foreign direct investment (FDI) in the US also grew significantly, reaching $12.7 billion by 2020 and supporting over 70,000 jobs. According to a 2023 report by the Confederation of Indian Industry, Indian companies have invested over $40 billion and directly supported more than 425,000 jobs across 40 states.

However, the foundation of this partnership was not without its cracks. In 2019, the Trump administration withdrew India’s Generalized System of Preferences (GSP) status over concerns about market access. This program had granted duty-free treatment for certain Indian exports, and its termination signaled a new, more confrontational approach. The current administration’s return to power has accelerated this friction, causing the relationship to “sour” as it moved to double tariffs on Indian goods. This abrupt shift has “rattled investors globally” and marked a “significant shift” from the approach of previous administrations, threatening to undo years of growing alignment in technology and security that was intended to serve as a counterweight to China’s influence.

 

The Arbitrage Accusation: Justification for Tariffs

 

The official justification for the imposition of new tariffs on India is rooted in the accusation of “Indian arbitrage”. According to US Treasury Secretary Scott Bessent, this term describes India’s strategy of purchasing discounted Russian crude oil and then reselling it as refined products, such as petrol and diesel. Bessent has claimed that India has made “$16 billion in excess profits” from this practice, with some of India’s wealthiest families as the primary beneficiaries. The Trump administration views this trade as India “profiteering” and indirectly financing Russia’s war effort in Ukraine.

However, a closer look at the administration’s claims reveals a significant contradiction. The US has not applied these same secondary tariffs to China, despite Beijing also being a major importer of Russian oil. The official rationale for this disparity is that the Trump administration views China’s imports more favorably because it was a “significant customer before the war”. This double standard suggests that the tariffs on India are not based on a consistent policy of punishing nations that do business with Russia. This becomes even more apparent when considering the fact that a former advisor to President George W. Bush stated that the Biden administration had previously encouraged India to accept Russian oil to prevent a significant increase in global oil prices following the invasion of Ukraine. This prior encouragement and the unequal treatment compared to China indicate that the tariffs are less about the Ukraine war and more about exerting pressure on India to concede to long-standing US trade demands.

The tariffs themselves have been implemented in a phased manner. A 25% “reciprocal” tariff on Indian goods went into effect on August 7, 2025. An additional 25% tariff, explicitly linked to India’s Russian oil purchases, was scheduled for August 27, 2025, bringing the total duty to 50% for most Indian exports. While this sweeping measure targets a wide range of goods, certain key sectors remain exempt, including pharmaceuticals, electronics, energy, and critical minerals.

 

The Economic Shock: Widespread Impact and Industry Fallout

 

The sudden imposition of these steep tariffs has created an immediate crisis for numerous Indian export industries. Government data shows that India’s leather and leather product exports were nearly $4.1 billion between April 2024 and February 2025, with the American market accounting for $870 million, or around 20% of its total leather exports. With the new tariff structure, a pair of shoes that cost $100 in US retail will now face nearly 10 times more duty, jumping from 5-8% to 50%, adding an extra $50 to the price. This significant disadvantage threatens to wipe out Indian competitiveness against rivals like Vietnam and Indonesia, whose footwear enters the US at a duty of only 19-20%.

The impact extends far beyond the leather sector. According to a report by Cleartax, 55% of India’s US-bound exports are at risk, with sectors like textiles, gems and jewellery, marine products, chemicals, and auto components facing significant exposure. The human cost of this economic shock is substantial. Experts estimate that 200,000 to 300,000 jobs are at immediate risk, with a potential loss of as many as 100,000 positions in the labor-intensive textiles sector alone if the tariffs persist for over six months. Micro, small, and medium enterprises (MSMEs) are expected to absorb the heaviest blow, as they dominate these export-intensive industries.

Despite the immediate and substantial pressure, a paradox of Indian economic resilience is emerging. Analysts from S&P Global Ratings and Fitch have indicated that the high tariffs are unlikely to derail India’s long-term growth prospects. The rationale behind this assessment lies in India’s unique economic structure. The country’s economy is “relatively less trade-oriented,” with external demand contributing only 15% to the overall economy, while the remaining 85% is driven by domestic factors. The total value of India’s exports to the US accounts for only about 1% of its GDP. This limited vulnerability provides a natural cushion against external shocks and empowers New Delhi to adopt a more defiant and strategically autonomous posture. It suggests that while certain industries and their workers face real hardship, the US’s primary lever of coercion is not powerful enough to fundamentally alter India’s macroeconomic trajectory.

 

Part III: Corporate and Government Responses

 

Corporate Resilience: The Shift from “Make in India” to “Make Outside India”

 

In the face of these steep tariffs, Indian companies are re-evaluating their strategies to maintain access to the crucial US market. The crisis is forcing a pivot away from the “Make in India” model toward a new philosophy of “Make outside India” to circumvent the high duties. This is not a theoretical concept; Indian firms are already implementing this strategy. Pearl Global, the country’s largest listed garment exporter, is actively moving some of its production to countries with lower tariffs, such as Vietnam, Bangladesh, and Guatemala. Similarly, Titan, the company behind the Tanishq jewelry brand, is contemplating relocating parts of its manufacturing to a Gulf Cooperation Council (GCC) nation to secure low-tariff access to the US. This strategic shift highlights the financial imperative of adapting to the new tariff landscape, as the UAE, for example, faces a baseline tax of only 10% on imports to the US, a stark contrast to India’s 50%.

The crisis has also spurred other forms of adaptation and innovation. Some Indian firms, like the pipe manufacturer Welspun Corp and electronics firm Aimtron Electronics, are exploring investments and acquisitions within the US itself to better serve their customer base and take advantage of new opportunities. The pharmaceutical sector, which remains largely exempt from tariffs, is also seeing increased investment in the US, as evidenced by Piramal Pharma’s $90 million expansion in two US locations. Beyond physical relocation, the crisis is reshaping the employment landscape. Traditional export sales jobs are being replaced by roles for “compliance officers, localisation managers, and trade diversification specialists” as companies seek new ways to navigate the complex global environment. The Indian government is also exploring targeted support for affected industries, considering measures like sector-specific credit lines, loan guarantees, and reduced certification fees for MSMEs rather than a broad, overarching scheme.

 

New Delhi’s Defiant Stance: Prioritizing National Interest

 

In the face of mounting pressure, the Indian government has adopted a position of strategic defiance. The official response has been consistent and unequivocal: its foreign policy and trade decisions are guided solely by “national interest” and “strategic autonomy,” not geopolitical pressure from other nations. External Affairs Minister S. Jaishankar has dismissed the accusations of “profiteering,” stating, “It’s funny to have people who work for a pro-business American administration accusing other people of doing business. If you have a problem buying oil or refined products from India, don’t buy it”. He has also pointed out that India’s decision to purchase Russian oil was internationally supported at the time because it helped to stabilize global prices, a fact that was even acknowledged by the Biden administration.

Commerce Minister Piyush Goyal has reinforced this stance, making it clear that “geopolitical considerations or wanting to look good will never drive India’s trade decisions” and that the “red lines” in negotiations are the interests of India’s farmers and small businesses. The government’s confident posture is not merely rhetorical; it is founded on the reality of its economic structure. Because India’s economy is largely driven by robust domestic demand and its exposure to US exports is limited, New Delhi can withstand the tariffs in the long run. This limited vulnerability provides a solid foundation for its defiance, allowing it to push back against American coercion from a position of relative strength and to explore new opportunities for trade diversification with other partners.

To signal its seriousness, India has also taken a retaliatory measure by temporarily suspending most international postal services to the United States. This action, taken in response to new US customs duty policies that withdrew the duty-free exemption for low-value goods, serves as a clear indication that New Delhi will not be pressured without consequence. This calculated move further underscores India’s commitment to protecting its interests and demonstrates its willingness to use its own economic levers in this new era of trade friction.

 

Part IV: The Broader Global Realignments

 

 

The European Dilemma: Humoring Trump to Contain Putin

 

The geopolitical friction between the US and India is but one example of a broader global realignment prompted by the Trump administration’s approach to the Ukraine war. European and NATO leaders are now engaged in a delicate diplomatic balancing act. Publicly, they have expressed support for President Trump’s peace efforts, with many using public comments to “heap praise on Trump” and calling the White House meeting “an important step toward ending this war”. French President Emmanuel Macron has stated that while he believes Putin does not want peace, he is optimistic that Trump does.

However, European leaders privately hold deep skepticism about the sincerity of Russia’s intentions. Their strategy is to “humor and praise Donald Trump” in the hope of calling Putin’s bluff and forcing him to show his true intentions. They believe that if Putin is shown to be the primary obstacle to peace, it will compel the US to act more decisively, strengthening the case for tougher sanctions. European officials view the high tariffs imposed on India as a crucial element of this strategy, believing that the economic pressure on a key Russian partner was instrumental in compelling Putin to engage in talks in Alaska. This underscores a new transatlantic dynamic where European leaders are willing to adjust their own red lines—such as dropping the demand for an immediate ceasefire—to maintain a united front with Washington and leverage its economic power.

This approach is also born out of necessity. President Trump’s “America First” policies and repeated criticisms of NATO have strained transatlantic relations and led European states to question their reliance on American defensive guarantees. This has forced them to consider bolstering their own defense mechanisms, a shift that presents a long-term risk for the US of alienating traditional allies with its unilateral policies. The European dilemma illustrates the high-stakes gamble of the current diplomatic moment, where the goal is to contain Russia while simultaneously preparing for a future with a potentially unreliable American partner.

 

The Sino-Russian Playbook: Capitalizing on Friction

 

The geopolitical fallout from the US-India trade dispute extends directly to China and Russia, who are actively capitalizing on the friction to strengthen their own positions. Beijing views the “breakdown of political trust between New Delhi and Washington” with a “certain amount of schadenfreude,” seeing it as working in its favor. The US tariffs have had the unintended consequence of accelerating a cautious rapprochement between India and China. The two nations have taken recent steps to ease visa restrictions, discuss direct flights, and even reopen border trading posts. This potential for a strengthened Sino-Indian economic and diplomatic relationship serves as direct “collateral damage” to Washington’s broader Indo-Pacific strategy, which relies on a strong US-India partnership to counter Beijing’s growing influence.

Russia, for its part, is leveraging its deepened ties with both India and China to form a counterweight to Western groupings. Foreign Minister Sergey Lavrov has framed the RIC (Russia, India, China) platform as a means to “balance” US influence. This is more than diplomatic posturing; Russia remains a major supplier of defense equipment to India, from S-400 missile systems to BrahMos missiles. By nurturing its relationships with its two largest continental neighbors, India is sending a deliberate message to Washington that its partnership is a choice, not a compulsion, and that its long-standing policy of strategic autonomy remains intact. The confluence of these events—the US alienating a key partner, Europe re-evaluating its security, and a Sino-Russian bloc solidifying—highlights the potential for a permanent, global realignment in which Washington’s influence is diminished.

 

Conclusion: A New Era of Economic Statecraft

 

The confluence of President Trump’s foreign policy on the Russia-Ukraine war and the resulting trade dispute with India is a powerful case study in the new era of global statecraft. The tariffs imposed on India are not isolated trade measures but are symptomatic of a broader shift toward the weaponization of economic power to achieve geopolitical ends. This approach contains inherent contradictions that undermine its stated purpose: it accuses India of financing Russia’s war effort while giving a pass to China, a far larger importer of Russian energy, and ignores the fact that a previous US administration had encouraged the trade to stabilize global markets.

This analysis demonstrates that the American administration’s primary lever of coercion—economic tariffs—is far less powerful than it appears. India’s resilient, domestically driven economy and its long-standing commitment to strategic autonomy have provided a foundation for a defiant and pragmatic response. Rather than folding under pressure, Indian businesses are innovating, relocating production, and diversifying trade, while the government is firmly prioritizing national interest over geopolitical alignment. The tariffs have had a ripple effect, prompting Europe to re-evaluate its reliance on the US and encouraging a cautious rapprochement between India and China.

The resolution of this trade dispute will not only determine the future of the US-India relationship but will also serve as a barometer for how international relations will be conducted in the future. The current crisis may ultimately accelerate India’s move toward permanent strategic autonomy and market diversification, potentially weakening the very global partnerships the US seeks to build. This episode confirms that the power dynamics of the 21st century are shifting, with economic interdependence and strategic defiance emerging as potent forces in a multipolar world.