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Former Reserve Bank of India (RBI) Governor Raghuram Rajan has sharply analysed Donald Trump’s latest 50% tariff hike on Indian goods, framing it as a geopolitical weapon rather than a mere trade measure. His insights, coupled with broader observations, highlight how India is being drawn into Washington’s complex power play.

📉 The Tariff Push: More Than Economics

Raghuram Rajan explained that Trump sees large US trade deficits as proof of foreign exploitation—even though Americans enjoy cheaper imports. For Trump, tariffs are:

• A way to “level the playing field”
• A tax on foreign producers disguised as consumer protection
• A tool to project US influence abroad without direct military entanglement

“Tariffs are less about fairness and more about leverage,” Rajan noted, underscoring the political edge of Trump’s economic agenda.

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India Singled Out

Unlike many Asian peers, India faces harsher tariff penalties. Initially set at 25%, duties on Indian exports were doubled to 50%. Raghuram Rajan attributes this to India’s continued imports of discounted Russian oil, which Washington claims indirectly funds Moscow’s war chest.

Yet, Raghuram Rajan observed, other major buyers like China haven’t faced the same punitive measures, raising questions of political manoeuvring rather than economic consistency.

🛢️ The Russia Oil Link

India has increased Russian crude purchases since the Ukraine conflict, citing energy security and lower costs. While not illegal internationally, the US has framed these deals as undermining sanctions.

By linking tariffs directly to oil imports, Trump’s administration has converted trade policy into a strategic cudgel, aiming to coerce India into aligning closer with Washington.

⚖️ Power Play, Not Fair Play

Raghuram Rajan concluded that Trump’s approach reflects raw power projection, not economic principle. Tariffs are being wielded to force India into difficult choices:

• Accept steep duties and suffer economic costs
• Or cut Russian oil imports and sacrifice energy affordability

“India must now weigh whether cheap Russian oil is worth the tariffs,” Raghuram Rajan warned.

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🗣️ Geopolitical Perspective: Trump’s Tariffs as a Broader Power Game

The current tariff drama, however, is not a surprise for India. From day one, Trump has signalled a clear intent to use tariffs as his single most powerful instrument—addressing issues like de-dollarisation, the ballooning US trade deficit, big tax cuts, his personal political interests, and soft power diplomacy.

Yet, this strategy has not succeeded with major powers like China or the EU. While showing the world the “peace card” on Ukraine and Russia, Trump has looked for areas where he could still claim influence—and thus, he turned toward India.

Recent reports even suggest Trump has been telephoning India’s leadership, but New Delhi has remained notably unresponsive. India’s silence signals that Washington’s tariff coercion may not yield the desired leverage.

When we speak of Russian oil, it is also worth noting that several refiners and companies—like those in India and even in the US—profit from re-exports. This underscores that the narrative of “blame” is selective. In reality, this is a larger US power game, where liability is shifted and political optics trump economic fairness.

🌍 Broader Geopolitical Stakes

India insists its purchases of Russian oil are a sovereign energy choice, necessary to meet demand affordably. But Trump’s tariffs have neutralised much of India’s cost savings, effectively taxing India for its independent foreign policy.

The episode highlights a larger trend: the weaponisation of trade to pursue global influence. For India, the challenge will be balancing its strategic autonomy against rising economic pressure from Washington.

Raghuram Rajan, Trump tariffs, Raghuram Rajan India US, India Russian oil imports, US-India trade war