The additional 25% tariff penalty imposed on India by Trump administration, taking the overall tariff level to 50%, signals a low point in US-India bilateral relationship, perhaps the lowest in the post liberalisation period for India. A 50% tariff rate, even though projected to be imposed after a 21-day period, will not only alter India’s trade relationship with the US but also significantly impact its capital markets, while increasing its exchange rate volatility, given how deeply entwined India is, for its investment needs, on the American market. Being cornered by Trump, India’s options now are limited to say the least. Post the liberation day announced tariff levy, India tried to negotiate in good faith and continuously. But, perhaps the gap between India’s own negotiating brief and Trump’s maximalist agenda proved too wide to bridge-and relied too heavily on the perceived gains of an existing personal dynamic between Trump and Modi, which as one can see now, didn’t have any positives for India.For now, yes, India can seek to diversify its macro-economic integration outlook towards other countries, including a tilt more favourable towards China and Russia, as PM Modi plans to visit China later this month for the upcoming SCO meet. However, these steps are more effective in the medium-to-term period, where reorientation of demand and supply chain forces will take their own time.Also read: ‘New’ Trump Tariffs May Further Expose India’s Own Structural WeaknessesGiven India’s own macroeconomic position, as vulnerable as it is now, it is imperative for the government to try and achieve a trade-compromise with the US in the short term at least. It may even start with a direct call perhaps between PM Modi and Trump where an appeal for restoring trade negotiations while meeting the US halfway needs greater emphasis before trade negotiators get back on the table. Clearly India has more to lose from the aggressive, impatient posturing of Trump to get a deal out of India while striking at the heart of India-Russia economic relationship.The US’ own stance here with Trump’s weaponisation of tariffs as a political leveraging tool seems quite clear. Trump’s additional 25% penalty on India after he grew more impatient and frustrated with the Indian deal falling out is out of his usual playbook. He will continue bullying India, as he has done most other nations, to get to a favourable term of trade agreement. This includes, in this case, cutting off its embedded economic access and trade linkages for oil-energy needs from Russia (which was not part of the earlier negotiations between US and India). His effort to strike at India now perhaps is also to get to Russia (and the RIC relationship between Russia, India and China), given the pressure the US is in to achieve some kind of a ceasefire or truce to end the Russia-Ukraine war, a subject perhaps of obsessive compulsion for the Euro-Trans Atlantic belt for a few years now, one that matters less for countries in the Global South but now may perhaps cause a degree of caution or restrain in India’s own relationship with Russia in the short term. This author, at the time of the beginning of military conflict between Ukraine and Russia, had emphasised a degree of caution for India arguing that any degree of expanded economic interdependence may impose costs on India in the future. It seems that cost is being reflected now in economic terms from the tariffs imposed on India by Trump. In its own economic and foreign policy strategy amidst the havoc Trump has caused on the geoeconomic order to get trade deals renegotiated in a bilateral form, India perhaps relied too heavily on the personal relationship dynamic shared between Trump-Modi from his first term. That was then and has been now in retrospect a mistake. India, while trying to stick to its own position and red lines, for good reasons then, may now need to explore areas of other cooperation where US access to India market (outside agri and dairy sectors) can be achieved with added sweeteners on the deal and on something that’s going to give on Russia. At the same time, Modi would need to swallow his own pride and ego, keeping the past aside, to reach out to Trump for a compromise, which is needed to ensure that India is not alienated for strategic reasons in an already fractured economic landscape. The other option for India could be to take a leaf out of China’s playbook to deal with the Trump administration, even though India’s leverage vis-a-vis China against the US is on a different footing but strategically, there maybe lessons here. When US increased tariffs on China to around 140-150%, China retaliated with its own tariffs on American imports to around 125% but at the same time kept the trade negotiation process open while leveraging its rare-earth minerals resource for the US to progressively achieve a renegotiated term of trade agreement – bringing the tariff levels down to 35%. Trump realised that the tech-industry of the Silicon Valley would suffer if the rare-earth minerals supply-loop was deeply affected and hence conceded for the purpose of a workable deal with China.India and Modi will need to carefully understand Trump’s ask here, leverage what it can on offer on trade and reducing ties with Russia (maybe as a signalling measure) and meet the US halfway in bringing its own tariff levels down. While cornering India, Trump has left the Modi administration now with no option but to come back with a better offer. That’s why a 21-day window has been provided for India. Also read: Trump’s Coercive Tariff Diplomacy and Its Global FalloutFrom a domestic political economy standpoint, the Modi government and the BJP has little face to show in handling US and Trump so far. Diaspora politics too has not worked for the Modi administration which prides itself on appealing to the Indian American community in the US as a benchmark pillar of strength in the US-India relationship. On strategy, post the initial liberation day tariff levy, one may imagine that India should have been aware of its overall strategy to deal with an unreasonably, unpredictable US administration, learning from the marginal cases of negotiated success seen between the US with countries like South Korea, Japan and others. Each of these countries which managed to strike a deal with the US realised a two-frontal approach to negotiate with Trump: giving in to his ego while compromising on certain areas in trade with a leveraging tool (or bargaining chip). India’s own relationship with the US is important and strategically crucial in South Asia (under a rising and more assertive China) and Trump does want a deal where a point of leverage for us needs to be effectively demonstrated – emerging from the existing deeper ties in defence to the entwined technology related areas for skilled human capital mobility – to try and achieve a deal here.Deepanshu Mohan is a professor of economics, dean, IDEAS, and director, Centre for New Economics Studies. He is a visiting professor at the London School of Economics and an academic visiting fellow with AMES, University of Oxford.