The imposition of tariffs of up to 50% by the United States on key Indian products marked a dramatic shift in a relationship that, for two decades, was presented as a model of strategic cooperation. India, the world’s largest democracy and fifth-largest economy, had been Washington’s key ally in the Indo-Pacific against China. The U.S. government’s decision to raise tariffs at a time when the India–Middle East–Europe Economic Corridor (IMEC) is in its launch phase exposes the contradictions of geopolitical economics.
The Indian Corridor, announced at the G20 Summit in New Delhi in 2023, envisions linking India, the Middle East Gulf, and Europe through railways, maritime lines, energy grids, and digital cables. The goal is to cut transport time by roughly 40% compared to the Suez Canal, offering a safer and faster alternative route for global trade. This project is not neutral; it is the Western response to China’s Belt and Road Initiative and aims to curb the influence of competing powers.
Linking the IMEC to the Abraham Accords created a trade and energy axis of Israel–UAE–Saudi Arabia that bypasses Iran entirely and reduces Turkey’s strategic role in regional transport. For Tehran, the picture is clear: this project represents a strategic exclusion. The answer came via Hamas, which Iran politically and militarily controls. The flare-up of the Israel–Gaza crisis served as a warning to all involved: “We can make your route unviable.” The cost was thousands of deaths and a region once again plunged into war.
The U.S.–India trade rift
The imposition of tariffs is not a simple trade dispute. It strikes at the second pillar of the IMEC—backing from the U.S. and EU.
According to Indian data, tariffs hit the gems and jewelry sector directly, with Gujarat reporting a 70% drop in gold imports. Companies are considering relocating production to lower-tariff countries like the UAE or Mexico to maintain access to the U.S. market.
Indian reactions
Defence Minister Rajnath Singh spoke of “envy” at India’s rise, stating that “no power can stop its progress.”
Reports point to a “freeze” on certain defense procurements from the U.S., a move with strong symbolism and practical pressure.
Industry groups FICCI and CII warned of severe export and job losses, calling for diplomatic de-escalation.
The GJEPC warned of trade diversion and permanent loss of market share.
New Delhi’s stance is firm: national dignity and strategic autonomy. The message to Washington is that India does not consider alignment with the Western bloc to be a given.
Cyprus’ role and the European dimension
In June 2025, Narendra Modi visited Cyprus, promoting Nicosia as the IMEC’s EU gateway. This move showed that, despite trade tensions with the US, India continues to secure critical nodes along the route.
However, without a U.S. political umbrella, European support alone cannot fill the gap.
The geopolitical equation
The IMEC rests on three pillars:
- Middle East—energy and logistics
- India—production and technology
- U.S./EU—funding and political backing
The U.S.–India crisis shakes the second pillar, the Israel–Hamas crisis threatens the third, and the growing competitiveness of China and Turkey undermines the first. The Iraq Development Road promoted by Ankara is already on the table as a competing route, while Tehran advertises its ability to destabilize any project that excludes it. The Indian Corridor is not just an infrastructure project. It is a power tool and a symbol of strategic balances.
The U.S.–India crisis removes the political umbrella that made the plan credible as a counterweight to China and the Iran–Turkey axis. The resurgence of violence in Gaza is a reminder that the Middle East remains the weak link of any trade artery aspiring to cross it. Without de-escalation on tariffs and security fronts, the IMEC risks staying a paper ambition—and ending up as another squandered chance for geoeconomic integration.