The Transactional Trifecta: How Pakistan Outmaneuvered India in Trump’s Tariff Game
By Prabjot Kaur
In August 2025, President Donald Trump unveiled a tariff regime that upended South Asian countries’ expectations: tariffs on Pakistani goods were slashed from twenty-nine to nineteen percent, while those on Indian goods were doubled from twenty-five to fifty percent. This dramatic divergence—a thirty-one-percentage-point gap between two nuclear-armed neighbors—represents more than merely a trade adjustment. It signals a fundamental recalibration of American strategic priorities in the Indo-Pacific region, where energy security and transactional diplomacy are rapidly superseding traditional alliance structures.
The numbers tell a stark story. India, America’s supposed “strategic partner” and the world’s fourth-largest economy, now faces some of the highest tariffs that Trump has imposed on any nation. Pakistan, despite years of criticism over economic fragility and questions about reliability, secured an improbable victory within Trump’s trade framework. To comprehend this diplomatic irony, one must trace the specific offerings each country presented during negotiations leading to August’s bombshell announcement.
These tariff decisions carry consequences that ripple well past simple trade flows. Allied capitals must be watching with alarm as Trump flips the script on decades of diplomatic convention. Countries that long established strong relationships with Washington are being hit with punitive tariffs. Meanwhile, countries Washington once kept at an arm’s length are cutting deals at Mar-a-Lago. The new formula is brutally simple: bring to the table what Trump wants or watch yesterday’s friendly handshake turn into tomorrow’s trade war.
Pakistan’s Winning Hand: The Transactional Trifecta
Pakistan’s successful tariff reduction hinged on three interconnected offerings that directly addressed Trump administration priorities, standing in stark contrast to India’s appeals of abstract strategic partnership.
First, Pakistan provided a range of economic incentives. The boldest gambit involved promising access to “massive oil reserves,” capturing Trump’s imagination. When Pakistani officials met with Trump on July 31, 2025, they presented these theoretical geological assets—which the U.S. Energy Information Administration regards skeptically—as immediate actionable opportunities, with the mere promise of preferential access proving sufficient to advance Trump’s energy dominance” agenda. Beyond oil, Pakistan offered access to critical minerals essential for American defense industries and advanced technology sectors. In September 2025, U.S. Strategic Metals signed an MOU with Pakistan’s Frontier Works Organization for critical minerals production—resources that the U.S. Department of Energy deems vital for advanced manufacturing and energy production. While skeptics note these minerals lie in unstable regions like Balochistan, where even Chinese investors have struggled to operate, the promise itself aligns with Trump’s intent to reduce dependence on Chinese supply chains.
Pakistan’s diplomatic approach with the Trump administration also employed personal access. Understanding early on that the road to the White House goes through Mar-a-Lago, Pakistan has hired at least seven lobbying groups since January 2025, specifically targeting firms with Trump family connections, including former Trump Organization executives and even a former Trump bodyguard. By contrast, India did not hire a lobbying firm until April 2025, engaging only one, giving Pakistan a crucial first-mover advantage. Pakistan’s launch of the Crypto Council in March 2025 was not coincidental—it was specifically designed to dovetail with Trump family business interests. By April 2025, World Liberty Financial, in which members of the Trump family hold significant stakes, signed a deal with the Pakistan Crypto Council. The deal was facilitated by a web of Trump connections. With these connections, Islamabad had secured direct access to Trump’s inner circle. Former National Security Advisor Jake Sullivan would later allege that Trump “threw the India relationship over the side” because of these Pakistani business deals, a charge that highlights how personal and national interests may have clashed.
Second, Pakistan transformed its security relationship through concrete counterterrorism deliverables. The capture of the Abbey Gate bombing suspect, who was responsible for killing 13 American service members in Kabul, gave Trump a concrete victory he could cite to Congress when defending business deals and tariff reductions for Pakistan. When General Kurilla, the then chief of the U.S. Central Command, testified to Congress that Pakistan had been a “phenomenal partner in the counterterrorism world,” it marked a dramatic reversal from years of American accusations that Pakistan was sheltering terrorists within its borders. Trump’s March 2025 congressional address, during which he thanked Pakistan for capturing the suspect in the Abbey Gate bombing, contrasted sharply with his first-term tweets about Pakistani “lies and deceit,” regarding their work on counterterrorism. Trump further demonstrated this transformation by hosting an unprecedented White House lunch for Pakistan’s Field Marshal Asim Munir, which broke protocol, since Munir is not Pakistan’s head of state, reinforcing Trump’s appreciation for Pakistan’s actions.
Third, Pakistan masterfully leveraged the military crisis with India in May 2025. During the four day conflict between the nuclear-armed neighbors, while India denied that the United States had any role as a mediator, Pakistan seized the opportunity to publicly credit Trump with brokering the ceasefire, positioning Trump as a successful peacemaker who had prevented nuclear escalation in South Asia, another major foreign policy achievement he could showcase to the world. The contrast with India’s response was stark and telling: when Prime Minister Narendra Modi spoke to Trump after the Four Day conflict, he explicitly stated there had been no discussion of American mediation. In firmly declaring that “India does not and will never accept mediation,” Modi denied Trump the recognition he craved, making Pakistan’s praise of him even more valuable.
India’s Strategic Miscalculation
India offered none of these tangible incentives. Instead of concrete deals, New Delhi emphasized democratic values and long-term strategic alignment. India’s security cooperation was welcomed but generated no headlines for Trump to tout. In Trump’s transactional framework, Pakistan’s concrete delivery of captured terrorists, oil promises, and crypto deals were hard currency; India’s proclamations of strategic partnership were an abstraction.
India’s tariff punishment stems from what Trump perceived as economic betrayal on multiple fronts, most critically its continued purchase of Russian oil despite American pressure to stop trading with Moscow. India’s purchases of discounted Russian crude oil reached record levels in 2024 and 2025, directly undermining American sanctions designed to restrict Russia’s oil sales. When, in August 2025, India’s External Affairs Minister S. Jaishankar defended these purchases from Moscow, arguing that Americans themselves had encouraged India to “stabilize the world’s energy markets,” he missed the fundamental shift in Trump’s approach. Trump explicitly linked the fifty percent tariff to India’s purchase of Russian energy, framing it as both economic punishment and geopolitical disciplining. India’s USD 41 billion annual trade surplus with the United States became a liability rather than a source of leverage, reinforcing Trump’s narrative of America being exploited.
Furthermore, India failed to offer the kind of concrete, transactional benefits aligned with Trump’s deal-focused approach to diplomacy. While Indian officials emphasized long-term strategic partnership, defense cooperation, and shared democratic values, during trade negotiations these abstract benefits paled against Pakistan’s tangible offerings. India’s diplomatic rigidity over President Trump’s mediation role—prioritizing protocol over pragmatism—further irritated an administration that places high value on recognition and compliance.
Most importantly, India miscalculated by assuming its role in the Quad and Indo-Pacific strategy would insulate it from economic pressure. This represents India’s failure to recognize that Trump’s worldview separates trade relationships from security partnerships, viewing the former through a strictly transactional lens. India chose strategic autonomy over pragmatic accommodation, betting that strategic importance would outweigh economic disputes; at least momentarily, that bet failed.
The New Rules of Engagement
Trump’s South Asia tariff strategy highlights three core principles that are reshaping American foreign policy. First, immediate and monetizable assets outweigh long-term strategic alignment. Pakistan’s oil reserves—however dubious they may be—and crypto partnerships offer concrete opportunities for American business interests. India’s position as a democratic bulwark against China, its role in the Quad, and decades of strategic partnership fell short against Pakistan’s tangible offerings.
Second, public deference and ego-stroking yield better results than principled partnership. Pakistan credited Trump for mediating the India–Pakistan crisis in May 2025 and nominated him for a Nobel Peace Prize, feeding directly into Trump’s documented obsession with the coveted award won by his predecessor, President Barack Obama. India’s refusal to acknowledge any third-party role denied Trump the very recognition he craves for his legacy. India’s principled position, while aligned with its diplomatic interests, proved economically costly.
Third, every relationship is transactional and vulnerable to sudden shifts. The architect of the Indo-Pacific strategy can become a tariff target overnight for purchasing Russian oil. A country that once harbored Osama Bin Laden can be recast as a privileged partner simply by capturing a single terrorist and offering access to energy resources and rare earth minerals. This transformation has not gone unnoticed in the region: in February 2025, Singapore’s then-Defense Minister Ng Eng Hen observed that Washington’s image had shifted from “liberator to great disruptor to a landlord seeking rent.” Traditional alliances, strategic partnerships, and shared values have no place in this worldview.
For capitals around the world watching this drama unfold, the message is clear: approach Washington with concrete offerings, public flattery, and readiness to subordinate strategic autonomy to immediate American interests. Whether this transactional framework serves America’s long-term interests remains an open question.
Conclusion
Pakistan’s tariff victory and India’s punishment represent more than a trade dispute: they signal a fundamental shift in how America values its partnerships. In Trump’s Washington, strategic resources and transactional compliance matter more than democratic values or long-term alignment. Pakistan understood this reality and adapted; India, clinging to strategic autonomy and multilateral hedging, did not.
The immediate winners and losers are clear. Pakistan gains preferential market access, potential investments in oil and critical minerals, and restored strategic relevance. Additionally, as an added bonus, the diplomatic coup of Pakistan’s nomination of Trump for a Nobel Peace Prize contrasted sharply with India’s refusal to acknowledge the mediation role he claimed to play. India faces economic pressure, supply chain disruptions, and a burgeoning relationship turned on its head while Pakistan—long criticized for harboring terrorists—receives preferential treatment. American businesses may benefit from the resources and crypto ventures in Pakistan, assuming these materialize beyond promises in a region where even Chinese investors have struggled to make gains.
Pakistan’s upper hand in the tariff negotiations also reflects structural differences between the two systems: opaque deals of such magnitude are difficult to execute in the Indian system. India’s democratic institutions, with their requirements for democratic checks, parliamentary oversight, competitive bidding processes, and right-to-information laws, make such personalized deal-making nearly impossible. Opposition parties in parliament and judicial activism would likely challenge any attempt to mix family business with state policy. Such democratic and anti-graft safeguards proved to be a liability in Trump’s transactional framework, where speed and secrecy matter more than process and propriety. Meanwhile, the military’s stranglehold in Pakistani politics enabled Field Marshal Munir to make swift commitments on oil access, crypto partnerships, and rare earth elements without legislative scrutiny or public debate. The Witkoff family’s business dealings, the Pakistan Crypto Council appointments, and the promises of trillions in mineral wealth all moved through Pakistan’s system with remarkable speed and minimal transparency.
The long-term costs, however, may prove steep. Trump’s transactional approach has created perverse implications: allies hedge their bets and rivals sense opportunities, as the old architecture of American statecraft erodes. When personal business interests influence national strategy, and a single terrorist arrest outweigh decades of strategic partnership, America’s commitments shift from reliable to negotiable. For policymakers worldwide, the lesson is stark: in an age of transactional diplomacy, nations must weigh their strategic priorities against immediate economic needs. Pakistan, facing an economic crisis and seeking international rehabilitation, calculated that alignment with Trump’s terms was worth sacrificing some autonomy. India, as an emerging power with diversified partnerships and regional ambitions, determined that preserving strategic independence outweighed short-term tariff pain. Each nation’s choice reflected its relative position—Pakistan needed American support more urgently than India did.
The real question isn't whether nations choose independence or compliance, but rather how they balance competing priorities in a world where American partnership has become transactional. Pakistan aligned with Trump’s terms and secured lower tariffs while India held to its strategic autonomy and faced doubled rates. Whether this framework serves American interests—or merely those of Trump—remains to be seen.
Prabjot Kaur is a graduate of the Jimmy and Rosalynn Carter School for Peace and Conflict Resolution at George Mason University, where she earned her Master's in Peace and Conflict Resolution. She also holds a Master's in Diplomacy, Law and Business from O.P. Jindal Global University, India. Her research focuses on South Asian geopolitics and Indo-Pacific security dynamics, with published analyses on regional strategic competition, trade policy, and conflict resolution. She is currently preparing for doctoral studies in atrocity prevention.
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