Trump's Brics tariff warning puts India-US trade deal on shaky ground

By Ruchi Bhatia, Sudhi Ranjan Sen and Shruti Srivastava

  President Donald Trump’s threat to impose new tariffs on India over its participation in the BRICS forum puts New Delhi in a tough position as it races to finalize a favorable trade deal with the US. 

Trump said Tuesday that India could face an additional 10 per cent tariff alongside other members of BRICS — a bloc of emerging economies he has labeled “Anti-American.” The remarks came just a day after the US leader said he was close to finalizing a trade deal that New Delhi hopes would give it reprieve from 26 per cent reciprocal tariffs.  

The latest threat by the US president followed a two-day BRICS summit in Brazil, in which leaders agreed on a joint statement that criticized trade-distorting tariffs. But while Brazil and South Africa have blasted Trump separately for his comments, India has refrained from responding publicly, a sign that it’s treading a fine line in maintaining its relationship with Washington. 

Officials in New Delhi say they’re not overly alarmed by Trump’s latest threats for now. The US leader’s view is that BRICS is seeking to undermine the dominance of the US dollar, which is not India’s goal, the officials said, asking not to be identified because the discussions are private. India doesn’t support moves for a single BRICS currency, and any participation in local currency trade arrangements are aimed solely at reducing risks, they said. 

India’s Ministry of Commerce and Industry didn’t 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” on Trump’s tariff threats during the Indian leader’s state visit there. “We didn’t have an opportunity to discuss that.” 

With India set to assume the BRICS chairmanship in 2026, it will need to differentiate itself from members like China and Russia, who are seeking to build the bloc as a stronger opposition voice to the US. India would be banking on its strategic value and neutral currency stance to be treated differently by Washington.  

“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 Organization, 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.” 

India has been cultivated by several US administrations over the years as a strategic partner and key regional counterweight to an increasingly assertive China. As recently as April, US Vice President JD Vance remarked that the fate of the 21st century “is going to be determined by the strength of the United States and India partnership.” 

Those ties have recently come under strain, though, after Trump took credit for brokering a ceasefire between India and Pakistan in May. Modi has pushed back at Trump’s claims he used trade as a bargaining tool to secure a truce. The Trump administration has also made overtures to Islamabad, including its powerful army chief, in the aftermath of the conflict, a source of concern in New Delhi.  

Much is riding on the success of the India-US trade deal, which both countries have pledged to finalize 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 deal would signify the strong ties between the two countries. 

“The relationship with the US is in a good shape,” he said in an interview in London on Tuesday. If the terms of the trade deal are agreed, “that will be a very, very healthy sign.” 

After months of talks, Indian trade negotiators have put forward their best offer to the Trump administration and are now awaiting a response.  

The latest tariff threats from Trump may also be a bargaining tool to secure more concessions from New Delhi. Trump has previously threatened to slap 100 per cent levies on BRICS if they ditch the dollar in bilateral trade.  

“We need to distinguish between President Trump’s narrative and his action,” Kumar said.