How the 2026 Midterms Will Reshape US Trade Leverage Over India

Analysis

By: Jyotsna Bharti and Anusreeta Dutta 

Washington will see the 2026 midterms as a referendum on Donald Trump. However, New Delhi should view them from a different perspective. The outcome in the House is less important than the extent to which the next Congress allows Trump to continue shaping India policy as he has for the past two years: prioritizing tariffs, placing negotiations on the back burner, and keeping Congress in the loop only after decisions have been made. A White House that treats trade and market access as bargaining chips, and a Congress that constitutionally owns foreign commerce and appropriations, are heading for a collision. India happens to be standing where it lands. Trump no longer distinguishes between trade negotiations and foreign policy demands, as the February 2026 trade framework shows. Indian goods had been facing a combined 50 percent US tariff since late August 2025, a 25 percent "reciprocal" tariff plus a separate 25 percent tariff imposed specifically over India's Russian oil purchases. Under the February deal, Washington cut the reciprocal tariff to 18 percent and eliminated the Russia-linked tariff, in exchange for India opening further to American industrial and agricultural products and committing to stop buying Russian oil. That's market access tied to a foreign policy decision New Delhi has spent decades insisting is nobody else's business. The precedent matters more than the tariff number. Once trade, energy, and geopolitics get negotiated as one package, a concession in one area starts to look like an expectation everywhere else. The stakes are substantial. The US was India's largest trading partner in 2024-25, with about $131.8 billion in bilateral goods trade, roughly $86.5 billion of Indian exports and $45.3 billion of imports. Nearly a fifth of India's total goods exports run through this one market, spanning textiles, gems and jewelry, chemicals, engineering goods, and seafood, all exposed to whatever Washington decides next. But the leverage runs both ways. India offers Washington something it can't easily source elsewhere, a large economy whose rise fits neatly into America's own project of pulling supply chains away from China. Washington has market leverage, India has strategic leverage, and neither side gets to negotiate from a position of total strength. Most coverage misses something important: the Supreme Court's February 2026 ruling that the International Emergency Economic Powers Act does not authorize the president to impose tariffs at all, not merely that his use of it went too far. That single holding wiped out the entire IEEPA tariff architecture, including the tariffs already suspended on India. It didn't stop tariffs on India, though. It forced the administration to find other legal routes, including Section 122 of the Trade Act and Section 301 investigations. On March 11, the US Trade Representative opened Section 301 cases against sixteen economies, including the European Union and India, over alleged excess manufacturing capacity. The distinction matters more than it looks. A Section 301 tariff runs through a statutory process with its own procedures and its own political friction; an emergency power tariff didn't need any of that. This is what Indian policymakers should be tracking, more than the administration's day-to-day tariff rhetoric. A tariff resting on executive discretion can disappear in a single phone call; one built into statute can't, because it creates obligations that outlive the deal that produced them and gives Congress an opening to get involved. The midterms will help decide which mechanism ends up defining the relationship. Before the invasion of Ukraine, Russian crude barely registered in India's import mix. By 2023, it had reached 39 percent, close to 1.8 million barrels a day, because Indian refiners were buying up discounted barrels that European buyers had stopped touching. This was never really a foreign policy statement. It became one retroactively, once it handed Russia a bigger seat in India's energy security just as Western governments were trying to starve Moscow's oil revenue. That dynamic hasn't gone away. In June 2026, India's imports of Russian crude alone hit a record of roughly 2.6 to 2.7 million barrels a day, on ship-tracking data from Kpler and LSEG, out of total Indian crude imports running close to 5 million barrels a day that month, itself the highest monthly intake ever recorded. Russia's share of India's overall oil imports crossed 50 percent, up from 36.5 percent in May, mainly because the closure of the Strait of Hormuz cut off Iraqi and Gulf supply and refiners turned to Moscow to fill the gap at pace. That makes a course correction harder each year. The IEA expects India to drive global oil demand growth through 2030, adding 1.2 million barrels a day and pushing total demand closer to 6.6 million. Russian oil functions as load-bearing infrastructure in an economy that needs more oil every year and doesn't produce nearly enough of its own.

Congress could do real damage here, and the pressure is no longer theoretical. The Lindsey O. Graham Sanctioning Russia and Iran Act, which would authorise tariffs of up to 100 percent on the top buyers of Russian oil and gas, cleared a Senate procedural vote 86 to 12 in late July, a wide bipartisan margin that puts India and China squarely in its sights. The bill isn't stalled so much as it is complicated. Trump has pushed lawmakers to fold in tariff provisions targeting Iranian oil buyers as well, a change some Democrats are wary of, since it hands the president broader tariff authority than the original Russia-focused bill. The real uncertainty now sits in the House, where support for the sanctions themselves is strong but unease about expanding presidential tariff power runs deeper than it did in the Senate. What matters for India isn't which chamber moves first. It's whether the final bill locks in a Russia policy rigid enough that the White House can no longer carve out country-specific exceptions on the fly. The standard question, whether Democrats or Republicans are better for India, is the wrong one. A Republican Congress probably gives Trump more room to cut bilateral deals, but that coalition is itself split between Trump loyalists who favor the transactional approach and traditional hawks who have wanted a harder line on Russia for years. A Democratic Congress would likely tighten Trump's tariff power, which could help India on trade, while simultaneously pushing for tougher, codified sanctions on Russia, which wouldn't. A divided Congress might produce the messiest outcome of all, the White House cutting side deals while committees quietly build measures that are much harder to reverse later. The Senate vote on the Russia sanctions bill already demonstrates this: 86 votes to advance sanctions on Moscow, alongside real, still-unresolved resistance to how much tariff power the mechanism hands to the president. The same pattern will likely repeat the next time a trade fight over India reaches Congress. India needs to read the coalition behind a given policy, not assume a change in the majority party tells it anything reliable about what happens next. The underlying logic of the relationship hasn't stopped working, and China is the reason why. Washington's Indo-Pacific strategy rests on having a large, credible counterweight to Beijing inside the region itself, one that doesn't require a treaty commitment or forward-deployed American troops to be useful. India is the only country that fits that description at scale. The Quad, expanding defense co-production and technology-sharing arrangements under the US-India roadmap, and deepening maritime security cooperation in the Indian Ocean have all continued to widen even as trade and Russia turned into open sores. None of that is incidental goodwill; it reflects a bet in Washington that an India tied more closely into US-aligned supply chains and security architecture is worth more strategically than whatever near-term trade friction it costs. The February framework's own language on resilient supply chains reflects that same logic. The relationship hasn't been reduced to tariffs, whatever the headlines suggest, because the China calculus that anchors it doesn't reset with each new tariff fight. But the terms are shifting. Sections of Washington's policy establishment increasingly appear to expect India's geography and market size to convert into actual alignment, on Russia, on China, and on the issues that matter most to American planners. New Delhi wants the access, the technology, and the capital, without signing up for anything resembling a formal alliance and without giving up relationships it still needs. Whether described as diversification, hedging or calibrated partnership, India continues to pursue strategic cooperation with Washington without surrendering strategic autonomy, and that posture is precisely what is now under the most pressure. Keeping energy, trade, technology and supply-chain resilience in separate boxes is getting harder, since each one now feeds into the others and all of them feed into the US-China contest. This creates a genuine paradox: the closer India moves toward Washington, the more exposed it becomes to Washington's shifting priorities, yet the better it manages to hold onto Russia and its other relationships, the more pressure it invites to prove where its loyalties lie. India's leverage comes from being important to the United States without being owned by it, and left unmanaged, economic dependence quietly erodes the room that makes that position possible. Strategic autonomy was never a slogan free of cost; the 2026 midterms are effectively a test of how much that autonomy is worth to New Delhi once the bill starts arriving in the form of tariff schedules and sanctions carve-outs.

Manufacturing's share of India's gross value-added sits at roughly 17 percent, well short of the 25 percent target the government has set for itself. Even as building manufacturing capacity sits at the center of the country's own growth strategy, a thin industrial base means India can't absorb a shock quickly, substitute imports fast, or open new export markets on short notice when an existing one gets cut off. No amount of skillful diplomacy fixes that on its own. The same is true of oil, import volumes will keep rising through 2030 regardless of how quickly renewables scale up, and diversifying suppliers or building out strategic reserves helps only at the margins. Realistic independence from every major power was never on the table. The more achievable goal is spreading the dependence widely enough that no single partner, not Washington on tariffs, not Moscow on crude, not Beijing on components, can convert one relationship into leverage over everything else India is trying to do. It also means looking past the White House itself. Congressional relationships, American businesses, state governments, and the wider policy community in Washington all matter more as US economic policy becomes more institutionalized and less dependent on whoever occupies the Oval Office. Leader-level diplomacy has real value and has kept the channel open through some genuinely difficult patches, but a relationship that leans this heavily on executive goodwill stays exposed to election cycles and institutional infighting in a way a broader relationship wouldn't be. The forces pulling India and the US together, China above all, are stronger than any shift in congressional arithmetic, and the sources of friction, trade deficits, tariffs, Russian oil, the fight over how much power a president should hold, aren't going away regardless of who controls the House or Senate. What the election can change is which institutions manage these fights, and how hard it becomes for a president to walk back a decision once it's made.

The midterms will decide how much leverage the White House holds. The more important question is how much leverage India has built for itself, and that answer doesn't come from Washington at all.

Disclaimer: This paper is the author's individual scholastic contribution and does not necessarily reflect the organization's viewpoint.

About the authors:

Jyotsna Bharti is a researcher, columnist, and content strategist whose work focuses on public policy, current affairs, media, and digital culture.

Anusreeta Dutta is a columnist and climate researcher with experience in political research analysis, ESG research, and energy policy.