Strategic Autonomy Under Strain: A Sociological Analysis of U.S.–India Economic Relations in 2025

OUS Academy in Switzerland
Aug 28, 2025
11 min read

Author: Ravi Kumar

Affiliation: Independent Researcher

Abstract

U.S.–India economic relations reached a decisive turning point in August 2025 when tariff rates on many Indian goods entering the United States were doubled to as high as 50 percent. While the relationship had been celebrated for its strategic alignment, growing trade, and deep people-to-people links, the tariff shock reframed policy choices in both countries. This article offers a critical, theory-informed analysis of the episode. Using Bourdieu’s framework of capital (economic, social, cultural, symbolic), world-systems theory’s core–semi-periphery dynamics, and institutional isomorphism in policy fields, it interprets the political economy drivers of the tariff decision and its likely consequences for trade, investment, supply chains, and diplomatic trust. The analysis argues that

(1) the tariff move reflects a clash between the United States’ coercive policy tools and India’s pursuit of energy security and strategic autonomy;

(2) the distributional effects will concentrate in labor-intensive export sectors and small and medium-sized enterprises (SMEs), with indirect impacts on currency, domestic demand, and employment;

(3) services trade, digital value chains, and diaspora-mediated social capital provide partial buffers; and

(4) the medium-term outcomes will depend on how both states convert their different forms of capital into legitimate influence, and whether each side chooses de-escalation, managed divergence, or deeper decoupling.

The article concludes with policy scenarios and recommendations designed to stabilize relations, protect vulnerable producers, and preserve long-term strategic cooperation.

Keywords: U.S.–India economic relations 2025; tariffs; strategic autonomy; global value chains; Bourdieu; world-systems theory; institutional isomorphism; trade policy; Russian oil; supply-chain resilience.

1. Introduction

For much of the last decade, U.S.–India relations were framed as a story of convergence: rising trade volumes, growing technology and defense cooperation, and a shared interest in resilient supply chains. In 2025, however, the partnership encountered its most serious economic shock in years as the United States raised tariffs on many Indian imports to as much as 50 percent. The policy rationale was overtly geopolitical—linked to India’s continued purchases of Russian oil—and intended to exert coercive pressure. The immediate consequences were commercial, financial, and political; the broader implications touch the very architecture of Indo-Pacific strategy and the governance of a multipolar global economy.

This article examines the episode through the lenses of critical sociology. It asks: What forms of capital are being mobilized by both states, and to what ends? How do core–periphery dynamics help explain the chosen instruments and their distributional outcomes? Why do policy fields in both countries show signs of mimetic and coercive isomorphism, even as leaders emphasize strategic autonomy? And what scenarios could unfold across 2025–2027 if the tariff regime persists or evolves? The analysis is designed to be accessible—using simple language—while engaging rigorously with theory and evidence.

2. Background: A Decade of Deepening Ties

Between 2015 and 2024, U.S.–India economic engagement diversified. Two-way goods trade grew and services trade became a crucial pillar as Indian firms expanded in IT, consulting, and back-office functions that anchor global value chains. The United States remained a top export market for Indian goods, especially in labor-intensive sectors such as apparel, textiles, gems and jewelry, carpets, and some categories of engineering goods. At the same time, India’s expanding middle class, digital transformation, and infrastructure spending attracted American investment in manufacturing, e-commerce, logistics, and renewables.

Despite this progress, structural frictions persisted. Differences over market access—especially in dairy, agriculture, medical devices, and e-commerce—recurred in bilateral talks. The United States also highlighted sector-specific tariff and non-tariff barriers. Conversely, India pointed to its development needs, the imperative of energy security, and a longstanding philosophy of calibrated openness. Thus, cooperation and contestation coexisted, setting the stage for the harder turn in mid-2025.

3. The 2025 Tariff Shock: Timeline and Composition

In mid-2025, the trade relationship moved from negotiation to sanction. A 25 percent “reciprocal” tariff was first announced in July and took effect in early August. Later in August, an additional 25 percent levy was imposed, taking total duties to as high as 50 percent on many products. The targeted list heavily featured labor-intensive categories—garments, footwear, gems and jewelry, sporting goods, furniture, and selected chemicals—where price sensitivity is high and global competition intense. Some sensitive items were exempted under other U.S. tariff programs, and there was a limited transit-time exemption for goods already at sea. The result was a substantial overnight loss of price competitiveness for a broad swathe of Indian exporters.

This is not simply a matter of arithmetic; it is sociologically meaningful. The sectors most exposed employ large numbers of workers in small firms and clusters (for example, textile towns and jewelry hubs). Tariff spikes can propagate through credit chains, inventory cycles, and local labor markets, amplifying stress for SMEs. Financial markets registered the uncertainty as Indian equities dipped and the rupee weakened, even as authorities and analysts debated the likely macroeconomic durability of the shock.

4. Political Economy Drivers: Energy Security and Strategic Signalling

The official justification for the additional U.S. levy was India’s continued procurement of Russian oil. For Washington, punishing purchases of discounted barrels was framed as sanction leakage and a strategic inconsistency by a key partner. For New Delhi, cheaper energy has been a non-negotiable input into growth and welfare, and an expression of strategic autonomy. This clash is less about commodity flows than about what Pierre Bourdieu would call symbolic capital—the recognized right to define legitimate action in the international field.

In that field, the United States wields political capital rooted in its status as a security provider and standard-setter. India wields developmental capital—the legitimacy derived from governing for a vast population with acute energy needs and budget constraints. The tariff episode can thus be read as a struggle over whose symbolic framing prevails: energy pragmatism as responsible statecraft, or energy pragmatism as enabling an adversary? The answer determines whether coercive instruments (tariffs) are seen as justified or as an overreach that undermines a valued partnership.

5. Bourdieu’s Capitals in Action

5.1 Economic Capital: Prices, Margins, and Market Access

Tariffs directly tax price competitiveness. For labor-intensive Indian exporters, a 50 percent duty can wipe out margins or push orders to competitors in Vietnam, Bangladesh, or other sites. Firms face three choices: absorb costs (rarely sustainable), reprice (risking demand loss), or re-route supply (which takes time and new relationships). In aggregate, this compresses economic capital for exposed sectors and their local ecosystems.

5.2 Social Capital: Diaspora, Supply-Chain Ties, and Lobbying

The 4-5 million-strong Indian diaspora in the United States—spread across technology, finance, healthcare, and academia—constitutes a deep reservoir of social capital. Diaspora networks can mediate conversations between companies and policymakers, explain sectoral realities, and temper worst-case narratives. Likewise, long-standing buyer–supplier relationships in apparel and jewelry may prefer renegotiation and temporary adjustments over abrupt switching, especially when quality, compliance, and delivery certainty are valued. Such ties may moderate the immediate shock, though not eliminate it.

5.3 Cultural Capital: Technical Know-How and Standards

Cultural capital—skills, certifications, and quality routines—can cushion shifts. Indian exporters who invested in lean manufacturing, traceability, sustainability reporting, and design capabilities have more levers to retain buyers despite higher landed prices. In parallel, U.S. buyers possess design and branding capabilities that raise the switching costs of reconfiguring supply chains overnight.

5.4 Symbolic Capital: Legitimacy and Narratives

Legitimacy is a scarce resource. If international audiences perceive India’s energy policy as consistent with development and stability, New Delhi gains symbolic capital. If U.S. policymakers convincingly argue that tariffs defend a rules-based order and deter sanction leakage, Washington’s symbolic capital rises. Competing narratives circulate through media, think tanks, and corporate boardrooms; their relative traction will influence how long these tariffs can be politically sustained.

6. World-Systems Theory: Core, Semi-Periphery, and Contested Discipline

World-systems theory views the global economy as a hierarchy: core states command high-value technologies and rule-making capacities; peripheral states supply resource-intensive or low-skill outputs; semi-peripheral states straddle both worlds, sometimes climbing up value chains. India’s industrial structure contains core-adjacent enclaves (pharmaceuticals, digital services, certain electronics) alongside large semi-peripheral zones (textiles, leather, gems).

Tariffs function here as a disciplinary device of the core: they communicate costs for policy divergence (in this case, on energy and market access) and can redirect surplus from semi-peripheral producers. But the semi-periphery is not passive. By hedging—diversifying markets, negotiating energy deals, and investing in upgrading—India aims to limit core discipline and preserve a path to higher value-added production. The 2025 episode is thus a struggle over who internalizes adjustment costs: U.S. consumers (via higher prices), Indian producers (via lower margins and employment), or third countries (via trade diversion and new opportunities).

7. Institutional Isomorphism: Why Policies Start to Look Alike

DiMaggio and Powell’s concept of institutional isomorphism helps explain convergent policy patterns. Three mechanisms are salient:

Coercive isomorphism: Facing external pressure, India may adopt export credits, currency flexibility, or regulatory tweaks that resemble measures used by other tariff-hit economies. Conversely, U.S. agencies refine tariff design through established administrative routines, making new sanctions resemble earlier ones.
Normative isomorphism: Trade ministries, central banks, and export bodies are professional communities. Shared training and peer learning nudge actors toward similar toolkits (relief lines for SMEs, interest subventions, market-diversification schemes).
Mimetic isomorphism: Under uncertainty, firms imitate perceived leaders. Apparel exporters might copy Vietnam’s factory compliance models; U.S. retailers might mimic competitors’ sourcing shifts. Imitation reduces perceived risk even if it is not strictly optimal.

Isomorphism stabilizes expectations in a turbulent field—but it can also entrench suboptimal equilibria if the original model is ill-suited to local realities.

8. Sectoral Exposure and Domestic Transmission

8.1 Textiles and Apparel

This cluster is highly price-elastic. A 50 percent tariff can erase the appeal of mid-range Indian garments that compete on quality-to-price ratios. Consequences travel quickly: mills reduce orders of yarn and dyes; logistics providers face idle capacity; seasonal workers lose shifts. Cluster-level institutions—export councils, design centers, testing labs—must pivot to buyer retention, product redesign, and new-market prospecting.

8.2 Gems, Jewelry, and Related Crafts

India’s gems and jewelry ecosystem relies on skilled artisanship, imported rough stones, and trust-based relationships. Even small price differentials can shift orders to alternative polishing hubs. Upgrading to high-design, branded pieces can defend niches, but the transition requires working capital, marketing know-how, and time.

8.3 Seafood, Carpets, Furniture, and Chemicals

These categories mix commodity-like competition with compliance complexity (hygiene standards, sustainability audits, and safety regulations). Firms with strong compliance records and digital traceability may hold on longer. However, freight and insurance costs can magnify tariff effects, forcing some exporters to mothball capacity until price conditions improve.

8.4 Spillovers to Credit, Currency, and Jobs

Reduced export orders stress working-capital lines and raise non-performing loan risks among smaller suppliers. A weaker rupee can partially offset tariffs by improving price competitiveness, but currency relief is blunt and uneven. The employment hit is concentrated in smaller towns and women-intensive workforces typical of apparel and home textiles. Policymakers must therefore design support that reaches clusters quickly and transparently.

9. Buffers: Services Trade, Digital Value Chains, and Diaspora Networks

India’s services exports—IT, business process management, engineering and design services—are less directly affected by goods tariffs. Continued demand for cloud, cybersecurity, and AI-enabled business services provides counter-cyclical support. Moreover, digital value chains (e.g., software embedded in hardware, design services for retail) create cross-subsidies: firms earning in services can help sustain goods-side relationships temporarily.

Diaspora networks amplify these buffers. Indian-origin executives in U.S. retail and tech firms often understand the capabilities of Indian suppliers and may negotiate transitional arrangements (e.g., split orders, shorter contracts, collaborative redesign to higher value points) rather than abrupt exits. This social capital is not a panacea, but it slows unraveling.

10. Strategic Narratives and Symbolic Struggles

Narratives shape economic outcomes. If U.S. messaging convinces consumers and Congress that tariffs defend a higher strategic order, domestic support for the policy will be durable. If Indian messaging persuades international buyers and partners that energy choices are pragmatic and fair, trade diversion away from India will be limited and temporary. Think tanks, business chambers, and media serve as intermediaries translating complex realities into legible stories. The side that accumulates symbolic capital faster will enjoy a reputational discount on its policy costs.

11. Scenarios for 2025–2027

Scenario A: De-escalation via Conditional Energy Adjustments

India gradually reduces the share of Russian oil in its import basket (for example, via ceilings, blended purchases, or seasonal swaps), while the United States narrows tariff coverage or rate. Confidence-building steps might include expedited sectoral exemptions, a focus on critical minerals, and resumption of structured trade talks. Impact: partial recovery of exposed exports; stabilization of currency and credit risks; preservation of strategic cooperation.

Scenario B: Managed Divergence with Selective Carve-Outs

Tariffs remain high on labor-intensive products but stay exempted for sectors of mutual interest (pharmaceuticals, selected electronics). India accelerates bilateral trade diversification (UK, EU, Middle East, Southeast Asia), strengthens export credit, and invests in upgrading clusters. U.S. retailers diversify sourcing toward a “China+Many” strategy in Asia while retaining Indian suppliers for complex, quality-sensitive lines. Impact: persistent pain in certain clusters; gradual rebalancing toward services and higher-value manufacturing.

Scenario C: Strategic Decoupling and Value-Chain Rewiring

Tariffs spread to additional categories and endure through the electoral cycle. India responds with industrial policy to localize more value (e.g., technical textiles, specialty chemicals), deepens South–South trade, and doubles down on domestic demand. The United States reorients toward the Americas and selected Asian partners for apparel and consumer goods. Impact: lasting reduction in bilateral goods trade elasticity; higher prices for U.S. consumers; stronger push toward automation and near-shoring; risk of diplomatic chill that spills into technology cooperation.

12. Policy Recommendations

12.1 For India

Targeted Relief for Exposed Clusters: Time-bound interest subventions, credit guarantees, and wage-support vouchers tied to export order retention and skills training.
Upgrading and Design Support: Grants for design, branding, and product diversification so firms can move up the value curve where price pass-through is feasible.
Market Diversification Pipelines: Fast-track standards equivalence and mutual recognition with the UK, EU, GCC, and ASEAN; sponsor trade fairs focused on mid-market retailers seeking reliable alternatives.
Trade Facilitation and GST Simplification: Reduce compliance friction and refund delays to ease working-capital stress for SMEs.
Rupee Management and Hedging Access: Expand affordable hedging instruments for small exporters to handle currency volatility.
Energy Security with Signalling: Maintain diversified energy options while articulating a clear, gradual pathway that lowers exposure to contentious supplies—thereby trading a measure of policy flexibility for reputational relief.

12.2 For the United States

Consumer Impact Review: Establish a transparent assessment of price effects in apparel, household goods, and food to ensure the policy’s costs are proportionate to strategic aims.
Sectoral Carve-Outs Where Security Interests Align: Preserve cooperation in pharmaceuticals, medical devices, and critical supply chains to avoid collateral damage to health and resilience.
Structured Dialogue and Off-Ramps: Offer measurable de-escalation steps contingent on verifiable energy-trade adjustments so tariffs function as leverage rather than a new normal.
Private-Sector Consultation: Leverage retailer and brand insights to avoid supply shocks and stranded investments that could erode U.S. firms’ competitiveness.
Multilateral Framing: Coordinate with partners to ensure measures are seen as part of a rules-consistent effort rather than unilateral punishment, preserving symbolic capital.

13. Methodological Note

This article integrates qualitative evidence from contemporary reporting with sociological theory. Bourdieu’s capital typology helps explain how material resources convert into influence. World-systems theory situates the episode within historical patterns of core–semi-periphery contention. Institutional isomorphism clarifies why policies converge in form under uncertainty and pressure. The focus is interpretive rather than econometric; it seeks to illuminate mechanisms shaping outcomes across firms, clusters, and states.

14. Conclusion

The 2025 tariff escalation is more than a trade disagreement; it is a referendum on the boundaries of strategic autonomy in a sanction-intense world. Tariffs tax not only goods but also trust—particularly when they hit sectors emblematic of employment, entrepreneurship, and regional development. Yet the episode also reveals sources of resilience: India’s services strength, diaspora networks, and upgrading potential; U.S. firms’ sophisticated sourcing capabilities and appetite for predictable rules; and a shared strategic interest in a stable Indo-Pacific.

Whether this moment becomes a brief detour or a durable rupture will depend on how both countries mobilize and transform their forms of capital into legitimate cooperation. A credible off-ramp would blend calibrated energy adjustments, targeted tariff relief, and renewed institutional dialogue. Even short of full normalization, managed divergence—anchored in transparency and sectoral carve-outs—could prevent unnecessary economic scarring while preserving space for the long game of technology and security collaboration. In a multipolar economy, the art of partnership is not the absence of friction, but the capacity to contain it without losing sight of common ends.

Hashtags

#USIndiaEconomicRelations

Sources

Bourdieu, Pierre (1986). “The Forms of Capital.” In Handbook of Theory and Research for the Sociology of Education, ed. J. Richardson.
Bourdieu, Pierre (1984). Distinction: A Social Critique of the Judgement of Taste.
Wallerstein, Immanuel (1974–2011). The Modern World-System (vols. 1–4).
DiMaggio, Paul & Powell, Walter (1983). “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields.” American Sociological Review.
Gereffi, Gary (2018). Global Value Chains and Development.
Reuters. “Trump’s doubling of tariffs hits India, damaging ties” (Aug. 27, 2025).
Reuters. “What does doubling of Trump’s tariffs mean for India?” (Aug. 27, 2025).
Reuters. “How floundering India–US talks led to high tariffs” (Aug. 27, 2025).
Washington Post. “India braces as 50 percent U.S. tariffs come into effect” (Aug. 27, 2025).
MarketWatch. “Trump’s 50% tariffs on India kick in: clothes, jewelry and shrimp are getting hit” (Aug. 27, 2025).

Evidence & citations

U.S. tariffs doubled to as high as 50% on August 27, 2025; sectors hit include garments, gems and jewelry, footwear, sporting goods, furniture, and chemicals; talks had failed beforehand.
Initial 25% took effect in early August; the additional 25% later in August lifted total duties to about 50%; U.S. trade deficit with India was $45.8B in 2024; limited exemptions for goods in transit and for items under other tariff programs.
Market and currency reactions in India around the announcement; officials signaled steps to cushion the blow; U.S. message tied tariffs to India’s Russian oil purchases.
Broader coverage and impacts discussed in major outlets the same day.