US President Donald Trump's threat to impose new tariffs on India due to its participation in the BRICS forum puts New Delhi in a difficult position as it works to finalize a favorable trade agreement with the US.
Trump said that India, along with other BRICS members, could face an additional 10% tariff. The remarks came just a day after the US president said he was close to finalizing a trade agreement that New Delhi hopes will spare it from 26% reciprocal tariffs.
Key Highlights
- Trump warns of additional 10% tariff on BRICS members, complicating India–US trade negotiations timeline.
- India stresses neutral dollar stance to dodge BRICS backlash while trade team heads to US for talks.
The latest threat by the US president came after a two-day BRICS summit in Brazil, during which leaders agreed to a joint statement criticizing trade-distorting tariffs. While Brazil and South Africa have each chastised Trump for his remarks, India has refrained from responding publicly, indicating that it is treading a fine line in maintaining its relationship with Washington.
Officials in New Delhi say they aren't overly concerned about Trump's latest threats for now. The US leader believes that BRICS is attempting to undermine the US dollar's dominance, which is not India's goal, according to the officials, who requested anonymity because the discussions are private. India does not support efforts to establish a single BRICS currency, and any participation in local currency trade arrangements is solely intended to reduce risks, they stated.
The Indian Ministry of Commerce and Industry did not respond to an email seeking comment. Senior Indian diplomat P Kumaran said at a press briefing on Tuesday that Prime Minister Narendra Modi and his Brazilian counterpart Luiz Inacio Lula da Silva had "no discussion" about Trump's tariff threats during the Indian leader's state visit to Brazil. "We didn't have an opportunity to discuss that."
With India set to take over the BRICS chairmanship in 2026, it will need to distinguish itself from members such as China and Russia, who want to establish the bloc as a stronger opposition voice to the US. India would expect Washington to treat it differently based on its strategic value and neutral currency stance.
"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 Organisation 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."
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Several US administrations have worked to cultivate India as a strategic partner and key regional counterweight to an increasingly assertive China. As recently as April, US Vice President JD Vance stated that the fate of the twenty-first century "will be determined by the strength of the United States-India partnership."
Those ties have recently been strained, however, after Trump claimed credit for brokering a ceasefire between India and Pakistan in May. Modi has denied Trump's claims that he used trade as a bargaining chip to secure a truce. In the aftermath of the conflict, the Trump administration has made overtures to Islamabad, including its powerful army chief, which has raised concerns in New Delhi.
Much depends on the success of the India-US trade agreement, which both countries have pledged to complete 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 agreement would demonstrate the two countries' strong ties.
"The relationship with the US is in good shape," he said in a London interview on Tuesday. If the terms of the trade agreement are reached, "that will be a very, very healthy sign."
After months of talks, Indian trade negotiators have presented their best offer to the Trump administration and are now awaiting a response.
Trump's latest tariff threats may also serve as a bargaining chip to secure additional concessions from New Delhi. Trump has previously threatened to impose 100% tariffs on BRICS countries if they abandon the dollar in bilateral trade. "We need to distinguish between President Trump's narrative and his action," Kumar stated.
