India US Trade Deal: Oil Deal With Pakistan, Sanctions On Indian Companies, Is Donald Trump Uneasy With the Rise of India ?

On July 31, President Trump announced that the US would add a 25 per cent tariff on everything imported from India, plus an unspecified “penalty” for India’s continuing purchases of Russian oil and military equipment. These new tariffs will begin on August 1 and apply to India's export-based industries, such as auto parts, electronics, steel and aluminium, gems and jewellery.

Trump was waiting for Modi to call him after his 25% tariff bomb. All other big nations/blocs like the EU, UK, Japan, etc had rushed their top leaders to Washington to placate Trump & negotiate softer deals. Trump waited for Modi to call. He’s still waiting. Three hours later no…

— Minhaz Merchant (@MinhazMerchant) July 30, 2025

Trump, in a post on his official platform, explained the new tariffs by citing historically high tariffs and unreasonable non-tariff barriers applied by India, and also their relationship with Russia. "While India is our partner," he said, "our level of trade between us is rather minimal, primarily due to their very high tariffs." He spoke of India's energy and defence relationships with Moscow as reasons for escalating conflict in Ukraine and instability abroad. 

Sanctions on Indian Companies After Iran Oil Dealings

In a different yet equally provocative gesture, the US State Department sanctioned six major Indian firms just hours after announcing the new tariffs. The sanctioned companies are accused of importing petrochemicals and petroleum products from Iran in violation of US embargoes. The list of sanctioned Indian companies includes Alchemical Solutions, Global Industrial Chemicals, Jupiter Dye Chem, and others, within whom it is claimed US companies handled more than $220 million in transactions in the previous 12 months.

These sanctions freeze any assets in the US held by the companies and prohibit US companies from business engagement with them, which would cause disruptions in India's petrochemical supply chains and worsen diplomatic relations.

US-Pakistan Oil Deal: New Dynamics

In a nearly simultaneous announcement, Trump revealed a “huge” oil partnership with Pakistan. With few details available, the deal proposed to jointly develop oil reserves in Pakistan. Trump added, “Who knows—maybe someday they’ll be selling oil to India!” Observers clearly perceived the timing—just as the hammer fell on Indian exports—as an immediate benefit to Islamabad and as a way to pressure New Delhi. 

The oil deal seemed to follow some high-level meetings between Pakistani officials and US Secretary of State Marco Rubio, with both sides claiming that their sanctions-laden trade negotiations with the US were nearing fruition. 

A Message to New Delhi: Is Donald Trump uneasy with the rise of India?

With punitive tariffs imposed against Pakistan, sanctions against Indian firms, and a relaunch of diplomacy with Pakistan, the trade news indicates that Trump’s administration is reassessing its previously endorsed South Asia policy. Indian analysts have commented that Trump appears uncomfortable with a South Asian strategy that allows rising Indian assertiveness on the global stage, growing energy and defence ties with Russia, and an Indian leadership role in organisations that the US views as adversarial, such as BRICS. 

There is a turning point in both Indian exports and diplomatic moves. Trump's actions are forcing New Delhi to rethink its policies. It's still not clear if the long-awaited trade deal between the US and India can still be saved.