For Trump there is a lot at stake in the Russia-Ukraine war. It has nothing to do with the altruism of saving the lives of Ukrainians. The war has not outlasted Russia’s warfighting capability, but it seem to have exhausted the West’s stamina for resistance. The main engine driving Trump’s imposition of the massive 50% tariff on Indian goods (with some exceptions) is India’s defiance of his demand that it abandon it’s huge oil purchases from Russia. These purchases strengthen Russia and reduce Trump’s leverage in negotiating a deal to halt and end the war in Ukraine – which is preventing the US from accessing Ukraine’s mineral resources after the ban on transfer of rare earths to the US by China. 

There is alarm in the US high tech industry, especially the electronics sector, which is dependent on these rare earth metals for various defence and other high tech applications including for the fabrication of advanced semiconductors. In order to mine and process these rare earth minerals Trump had forced Zelensky, by halting arms supplies, to sign the Mineral Resource Agreement (MRA) a.k.a. Agreement on the Establishment of a United States-Ukraine Reconstruction Investment Fund, on April 30, 2025. But the mining cannot start, even if private players are ready for mining and processing, unless the war ends. The more the war drags on, the greater is the vulnerability to China, and greater the anger against Putin. The continuation of the war also strengthens China’s leverage with the US in its tariff and export control negotiations. 

While China’s assistance to Russia by continuing to buy Russian crude oil was unstoppable given their powerful ‘partnership without limits’, India’s purchase of Russian oil is seen as reversible given India’s vulnerability to the entire spectrum of American leverage: military, economic, and financial. It also has a strategic cascading component: unravelling BRICS by compromising India, which is seen as its weakest pillar. India is the only BRICS member that has vehemently opposed China’s BRI, especially through POK, and toed America’s line by grandiosely backing the rival IMEC.

Conflict of interests between US and EU in the MRA

The MRA is becoming a black hole for Trump. The $350 billion that Ukraine owed to US has been written off through Article VI (5) of the Mineral Resource Agreement relating to ‘Contributions To The Partnership’ as the initial price, essentially for offering America ‘market based offtake rights’ in Article VIII of the MRA. These rights are heavily constrained by competing EU rights and Ukrainian obligations to service those rights, especially in the event of Ukraine being admitted into the EU – a possibility that pervades the MRA. In the preambular portion of the MRA the European Union is mentioned as a stakeholder along with the US to “increase investment in mining, energy and related technology”. Thereafter, it says that the “United States of America acknowledges Ukraine's intention to avoid conflicts in the drafting of this agreement with Ukraine's obligations related to European Union accession”.

In Article VII (1), relating to ‘Investment Opportunity Rights’, the conflict of interest between US and “Ukraine’s EU obligations” for mining and investments is specifically mentioned: “If, after the signing of this agreement, Ukraine needs to assume additional obligations related to its European Union accession that could impact this provision, the Parties shall consult and negotiate in good faith to adopt adjustments, as appropriate.” Again in Article VIII relating to market based offtake rights, Ukraine’s EU obligations are mentioned in identical terms. 

The upshot of this is that the Ukraine-US agreement recognises present and future EU interests in Ukraine’s mineral wealth, and the possibilities for conflict of interest. In this regard it may be noted that while Trump has claimed the EU would invest $600 billion in the US, the fact is that the EU has no power to guarantee private investments. Not merely that, the agreement has to be approved by all 27 EU members. 

Targeting Russia and China in the MRA

Russia and China are both opposed to the agreement because they are targeted for denial in both the participation in mining and from the proceeds of mining by virtue of several provisions in the MRA. The introductory portion refers to “Russia’s full scale invasion of Ukraine” and says “that those States and other persons that have acted adversely to Ukraine in the conflict do not benefit from the reconstruction of Ukraine following a lasting peace”. Article III relating to ‘Objectives Of The Agreement’ again refers to the “Russia’s full scale invasion of Ukraine” calling for a “tangible demonstration of the United States of America's support for Ukraine's security…” Article VI refers to possible delivery of new military assistance to the Government of Ukraine”. Zelensky’s recent rejection of a role for China in guaranteeing the security of Ukraine, and accusations of collusion with Russia’s invasion of Ukraine are not surprising.

Finding prospectors, prospecting, mining and processing rare earths for use may take about five years. But even for this long term strategy, Trump needs cast iron guarantees from Putin that the peace will hold. Putin will require guarantees that NATO will not be expanded to include Ukraine, nor will Ukraine be armed with weapons that can threaten the current asymmetry between Moscow and Kyiv. The post-Cold War experience, in which Washington sought to expand NATO to Russia’s doorstep through plans to include Ukraine, has left Putin with little reason to trust the United States. He would also have reservations about the clear anti-Russia cast of the US-Ukraine Mineral Agreement. 

Trump’s leverage on India

For fiscal year 2024-25, India’s total exports and imports are estimated at US$ 824.9 billion and US$915.19 billion respectively, leaving a trade deficit of $90.29 billion, which is entirely due to our unavoidable trade imbalance of about $100 billion (2024-25) with China. India’s bilateral trade with the US in fiscal 2024-25 was valued at $131.84 billion, with a trade surplus of about $41.18 billion. Though Indo-US trade accounts for less than 10% of India’s total international trade, the Indian diaspora in the US contributes about 28% of the total $135.46 billion remittance in 2024-25. 

Both in terms of trade surplus as well as inward remittances from US, the US has an important position, especially as remittances from UAE and West Asia are falling. The loss of the US-India trade surplus, the loss of some remittances from US due to visible tightening of immigration into the US, the resultant fall in India’s forex reserves, marginal economic slowdown with an estimated GDP loss of about 0.6%, job losses in sectors disproportionately dependent on exports to US – textiles, gems and jewellery, generic pharmaceuticals, electrical and electronic equipment, machinery, mineral fuel and oils, minerals, iron and steel etc – collectively are at the heart of the Indian government’s defensive posture towards Trump. This confrontation with the US could also eventually adversely affect our existing and future arms trade with the US as well as the limited cooperation with US in the already benign looking QUAD. 

A history of fence sitting

Because of technological shortcomings, we were compelled to import from China – our strategic rival – materials, components, assemblies, and subsystems across electronic, electrical, nuclear, chemical, plastic, and other sectors, amounting to about $127 billion in 2024-25.

Contrary to our atmanirbhar (self-reliance) claims, India’s Air Force, Navy, and Army remain heavily dependent on France, the US, Russia, the UK, and Israel for their cutting-edge offensive capabilities. This technological dependence lies at the core of our fence-sitting on global conflicts. We refused to condemn Israel’s genocidal assault on Gaza – even as China did. We maintained studied ambivalence on Russia’s war in Ukraine – while China openly backed Moscow. And when the US and Israel attacked Iran’s civil nuclear infrastructure – despite Tehran’s consistent friendship towards India – we remained silent, whereas China voiced opposition. We did not condemn Trump’s decision to dump the Paris Agreement on climate change, whereas China did. We saw an opportunity for India when Trump initially imposed/threatened to impose unilateral tariffs on a select group of powerful countries including on China, Canada and Mexico, and thought a quick deal with Trump was possible. We screamed “unfair, unjustified and unreasonable” only when the axe of 50% tariffs fell on us. But the Chinese ambassador to India Xu Feihong referring to this tariff imposition on India said on August 22, 2025: “China firmly opposes it. Silence only emboldens the bully”!

India’s pretensions of self-reliance

Technology is the principal currency of power and leverage. Yet, almost every commodity, subsystem, or system that India claims to manufacture with “world-class technology” is, in fact, of foreign origin. Be it a car of Euro 6 emission standard, a renewable energy device, a jet engine, a missile like Brahmos, a mobile phone like iPhone, the proposed Ahmedabad-Mumbai bullet train, a 1000MW nuclear power plant, a night vision device or even an OLED television. When foreign owned companies like Apple, or even household names like Suzuki establish manufacturing in India, the core critical technology remains in foreign hands and is never transferred to Indian manufacturers. In that way, while these companies generate employment and wealth, India remains dependent on foreign technology and they can suffocate our production capacity by withholding critical technology. It also enables foreign governments to threaten to transfer or actually transfer production to other countries for geo-strategic reasons, should the need arise. 

Among the seminal reasons for our techno-economic dependence is our weakness in the domain of electronics, specifically our dependence on semiconductors of intermediate and advanced nodes which are used in almost every commodity containing embedded world class technology. A Union minister referring to the planned ‘Made in India’ semiconductor chip by end of 2025 has claimed that it signified digital swaraj and India’s assertion of sovereignty over critical technologies! Nothing could be farther from the truth. We are trying to start fabricating semiconductors of 90-28nm with foreign collaboration. While we are attempting to enter the realm of fabricating what are near obsolete semiconductors, China has the strength to consider rejecting Nvidia H20 AI chip on grounds of security. It is here that China has broken the chains of US/Western technological bondage and apartheid and become a rival to the US for global supremacy. It is no longer dependent on US technology in any of the nine domains of US dual-use export controls: nuclear; advanced materials; material processing; electronics; computers; sensors; navigation and avionics; marine; and propulsion. Whereas India is self-sufficient in none of these insofar as world class technologies are concerned. 

We have copied the US Commodity Control List (CCL), including its performance thresholds, into our own Department of Commerce’s SCOMET list – even though, apart from a few items, we do not produce commodities or technologies that meet those thresholds. So whereas we pretend to be a technology ‘vishwaguru’ i.e. world leader, China actually has become one. That is their source of strength. That is why Trump respects Xi Jinping more than he respects Modi. That is why we fear that Trump could finalise a trade agreement with China ahead of an agreement with India. There could also be no agreement.

US tariffs have nexus with US national debt

The US cannot compete with China, which is responsible for about one third of the US trade deficit of ~$1trillion, and to the rising national debt. There is quiet recognition that this indeed is driving the imposition of tariffs. The claim that manufacturing will return to the US because of high tariffs is a red herring. That ship has sailed. So long as China continues to competitively produce world class materials, parts, components, assemblies and software that go into production of competitively priced commodities and technologies, it does not matter whether they are ‘made’ in Vietnam, Thailand, Indonesia, Malaysia, Australia, India or Bangladesh. It doesn’t matter with what label they enter the United States. The source will remain the same. Goods that contain embedded Chinese origin materials, parts, components assemblies and software that are freely available globally, cannot be barred entry into the United States no matter how the rules of origin are implemented. In that respect, China has outcompeted and out-priced the US in much of manufacturing. India understands that. So, though we resist Chinese investment for geo-political reasons, we are forced to import from China a variety of basic chemicals, materials components and assemblies primarily relating to the machinery, nuclear, electrical and electronics sectors, including semiconductors because they constitute a large portion of what we assemble or co-produce both for our domestic market as well as for export. We recognise interdependence and respect global supply chains even if they are asymmetrically leaning more towards China. Trump’s bid to supplant global supply chains with substantial US origin manufacturing cannot succeed in the long term.

The triumvirate and India

India is well and truly caught in this cross fire between the triumvirate – the US, Russia and China, the last of which has recently been tightening the export of some critical commodities to India. 

First, it appeared that the Modi government could increase oil imports from the US in the short term till Trump is President. The recent import of oil from Nigeria, over which US oil companies have a stranglehold, indicated this appeasement through surrogacy. This appeasement may be halted. 

Second, reduction of arms imports from Russia is unlikely, as it could endanger India’s security. 

Third, given the very limited US exports to India and the leverage the US has over India, the scope for reduction of tariffs is limited unless Modi makes compromises on Trump’s demands. 

Fourth, and most importantly, the recent flurry of diplomatic exchanges between India, Russia, and China – including Foreign Minister S. Jaishankar’s visits to China and Russia, NSA Ajit Doval’s trip to Moscow, Wang Yi’s visit to Delhi on August 19, and the upcoming Putin-Xi-Modi meeting in Tianjin on August 31 – may not merely represent strategic posturing. Rather, they seem to signal concrete steps toward altering India’s decades-old policy of strategic neutrality. This comes despite the Triumvirate’s firm hold over India in critical technologies and commodities, ranging from GE jet engines and BrahMos missiles to Chinese electronics and rare earth metals.

The triumvirate is engaged in the difficult task of agreeing on spheres of influence and strategic stability. They are simultaneously engaged in strategic manipulation of countries like India, Ukraine, Iran and Taiwan. Trump rolling out the red carpet for Putin in Alaska is another red herring insofar as it is supposed to indicate trust between Putin and Trump, though it did puncture Western narratives of Putin being a murderer and a dictator. It shows that Trump is not such a maverick as he appears to be with his boastful histrionics, but is a realist who is attempting a very difficult deal with Putin.

Trumped and outmanoeuvred

Our technological weakness and Modi’s misleading claims of self-reliance, our weak foreign policy anchored on strategic neutrality has made us an unreliable fence sitter in the arena of international politics. Modi misread Trump’s intentions towards India completely. When Trump imposed or threatened to impose high tariffs on countries like China and Canada, the Indian PM saw that as an opportunity to do a quick side deal with Trump, thereby promoting US unilateralism and our isolation. Now when he meets Xi Jinping in Tianjin he should feel embarrassed if not humiliated as China has condemned the 50% tariffs on India and called the US a bully to be opposed jointly – something he himself is afraid to say. The fear of being strategically marooned, even as we remain dependent on the US, China, and Russia for critical imports, is nudging India toward embracing the RIC as a strategic plank.

The Modi government was forced to resist Trump not because of any principle, but because resistance is required for the prime minister’s domestic political survival – even as India suffers economically due to huge dependence on US remittances, technology and vital trade surplus. Trump too misread Modi’s domestic compulsions and his flamboyant exhibition of camaraderie with Trump. The Ukraine war has put Trump in a difficult position not only vis a vis Putin, who is now backed by China and India, but also vis a vis the EU. That doesn’t help Modi on the tariff front. The much touted US India strategic partnership, whatever that meant, is in serious doldrums. India under Modi seems headed in a new direction where it will be compelled to make adjustments – if not compromises – with our principal opponent.

Rahul Singh is a former civil servant who retired from the Ministry of Defence.

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