Published Online:October 2026
Product Name:The IUP Journal of International Relations
Product Type:Article
Product Code:IJIR041026
DOI:10.71329/IUPJIR/2026.20.4.64-75
Author Name:Reema Thareja, Aditya Mehrotra, Jasleen Kaur, Payal Lal and Prerna
Availability:YES
Subject/Domain:Arts and Humanities
Download Format:PDF
Pages:64-75
The study examines how the US-India trade conflict reshaped bilateral economic relations without leading to a structural break in trade integration. Since 2018, tariff increases, the withdrawal of GSP benefits, and regulatory frictions have introduced measurable tensions in the relationship. Yet, rather than producing economic decoupling, the evidence suggests a pattern of strategic adjustment within an already interconnected system. Using bilateral trade data from 2012 to 2025, the study combines descriptive trend analysis with OLS estimation to assess aggregate trade effects. The results show that total goods trade increased from $89.56 bn in 2018 to $137.47 bn in 2025, despite phases of tariff escalation. Although short-term contractions were visible in labor-intensive sectors, the broader trajectory of trade remained upward. The pharmaceutical sector offers the clearest illustration of continued interdependence. US imports of Indian pharmaceuticals nearly tripled between 2012 and 2024, reflecting low demand elasticity and high regulatory switching costs. Overall, the findings suggest that the US-India trade war functioned less as a process of deglobalization and more as a bargaining phase within a resilient economic partnership.
The trade relationship between the US and India has shifted in recent years from steady strategic cooperation to selective economic confrontation. Beginning with the termination of India's generalized system of preferences (GSP) benefits in 20191, tensions gradually intensified through tariff increases, regulatory actions, and geopolitical signaling. By 2025, bilateral goods trade reached approximately $137.47 bn, yet tariff measures of up to 50% on selected product categories reintroduced friction into the relationship.