The year 2025 proved to be a defining period for India's foreign policy and trade strategy, dominated by an unpredictable United States administration under President Donald Trump. What began with official optimism swiftly turned into a series of complex diplomatic and economic challenges, testing the nation's strategic agility on the global stage.
The Unforeseen Economic Hurricane
In January 2025, External Affairs Minister S. Jaishankar expressed confidence, stating there was a "convergence of interests" with a Trump-led US. This optimism was short-lived. Within months, the administration unilaterally imposed 25% tariffs on Indian goods, a figure later escalated to a staggering 50%. The move left Indian officials seemingly unprepared for what the columnist termed "Hurricane Trump." The initial shock highlighted a potential gap in diplomatic foresight regarding Washington's transactional approach.
Diplomatic Manoeuvres in a Multipolar World
The geopolitical landscape shifted significantly after the Pahalgam terrorist attack. India's traditional adversary, Pakistan, led by Field Marshal Asim Munir, executed a swift diplomatic counter. Munir secured a major cryptocurrency deal with a Trump family firm, facilitated by Trump's associate Zachary Witkoff's visit to Pakistan. Subsequently, Munir was received as an honoured guest in Washington, where he made provocative statements against India and took the symbolic step of nominating Trump for a Nobel Peace Prize.
In contrast, India's response was perceived as reactive. Questions were raised about Prime Minister Narendra Modi's engagement strategy, including why he did not bring influential business leaders to meetings. Meanwhile, Pakistan's Prime Minister Shehbaz Sharif presented a tangible, albeit ambitious, offer involving rare-earth minerals from Balochistan. India's diplomatic efforts, despite employing high-cost lobbyists, struggled to penetrate Trump's inner circle, especially with the influential NRI lobby growing silent amid MAGA criticism of Indian immigrants.
Strategic Choices and Their Repercussions
India made several calculated moves. Modi's decision to decline a White House invitation while in Canada was widely praised, avoiding a potentially symbolic hyphenated photo-op with Pakistan's Munir. In August, the Tianjin summit saw Modi alongside Vladimir Putin and Xi Jinping, projecting India's strategic autonomy and alternative partnerships, even as it risked US ire. Trump later labelled India's economy "dead," despite its robust growth as the world's fourth-largest economy.
Modi's absence from the Gaza Peace summit further underscored an independent foreign policy line, earning praise from Western commentators who often critique him. The core challenge crystallised with the release of Trump's National Security Strategy, signalling a US pivot away from the Indo-Pacific and towards a potential G-2 dynamic with China, undermining the strategic partnership built with India over 25 years.
The economic impact was mixed. While doom-laden predictions about the tariff stalemate were belied by record-high exports in November 2025 and strong annual growth, the rupee became Asia's worst-performing currency due to trade uncertainty and foreign investor outflows.
Analysts suggest India faces an "outlier disadvantage" in the new multipolar order. Persistent threats from China, as Pakistan's military supplier and a border claimant, complicate the equation. Domestically, perceptions of growing illiberalism and majoritarianism, while potentially beneficial for the ruling party at home, are seen as damaging India's soft power internationally. The year underscored a critical lesson: in transactional diplomacy, as demonstrated by Pakistan's audacious offers, the art of the deal often values bold intent over immediate deliverability. For India, navigating this complex reality requires nimble and pragmatic statecraft above all else.
