By Suresh Unnithan & Nanditha Subhadra
More than a year into President Donald Trump’s second term, which began in January 2025, the United States is increasingly seen by allies and partners not as a dependable anchor of the international order, but as a source of dangerous unpredictability. What supporters once hailed as bold, transactional deal-making has hardened into a pattern of policy reversals, escalatory conflicts, and shifting commitments that have destabilized markets, strained alliances, and inflicted measurable economic pain worldwide. The 2026 Iran war and its disruption of the Strait of Hormuz, compounded by an aggressive global tariff war, stand as the clearest and costliest examples of this approach.
The Strait of Hormuz — the narrow chokepoint carrying roughly 20-21 million barrels per day of oil (one-fifth of global petroleum liquids) and significant LNG volumes — saw shipping traffic plummet during the conflict. Iranian blockades, attacks on vessels, and mining, alongside U.S. naval operations, caused effective supply losses peaking at 8–10 million barrels per day. Brent crude surged above $110–$120 per barrel, while Asian and European gas prices spiked over 50%. The shock has been felt most acutely in Asia, which receives the vast majority of these flows.
Asia and India: Dual Shocks from Energy Crisis and Tariffs
Asia has borne the brunt. Surging energy and fertilizer costs raised production expenses, disrupted supply chains, and threatened food security. Trump’s tariff regime — with duties frequently ranging from 15% to as high as 50% on various partners — added further uncertainty, slowing investment and forcing exporters to absorb higher costs or scramble for new markets.
India, the world’s third-largest oil importer (importing 85% of its crude, with 40–50% historically routed via Hormuz), faced acute pressure. Higher import bills, freight and insurance costs, and domestic fuel prices widened the current account deficit and fueled inflation. Sustained high oil prices threatened to shave 0.5–2.5 percentage points off GDP growth while adding 30–50 basis points or more to inflation.
Yet New Delhi mounted a robust and pragmatic response:
Energy Diversification: Indian refiners dramatically increased Russian crude imports (peaking near 2 million bpd), while ramping up supplies from the U.S., West Africa, Latin America, and other sources. By early 2026, India was sourcing oil from over 40 countries, with ~70% of shipments avoiding the Hormuz route.
Strategic Reserves and Demand Management: Controlled drawdowns from Strategic Petroleum Reserves and commercial stocks, priority allocation to households, increased domestic LPG output, and spot purchases of LNG and urea helped avert shortages.
Naval and Diplomatic Efforts: Indian Navy escorts for tankers and quiet diplomacy with Iran ensured safer passage for critical cargoes.
Trade Response: After facing steep U.S. tariffs on textiles, pharma, jewelry, and leather, India negotiated a partial bilateral trade deal in early 2026 that moderated some duties to around 18% in key sectors. It accelerated export diversification to Europe and Southeast Asia while providing domestic support to affected industries.
These countermeasures have helped India maintain fuel availability, keep refineries running, and limit the growth slowdown — with FY 2025–26 projections holding around 6.5–7.2% despite significant headwinds. However, they have come at a cost: higher fiscal subsidies, elevated import bills, and ongoing exposure to volatile global prices.
Patterns of Unreliability
The Hormuz crisis and tariff fallout are symptomatic of a broader Trump administration style. In July 2025, a trade deal with the European Union was reached at Trump’s Turnberry resort, centered on 15% tariffs. Months later, the agreement frayed as threats of 25–50% duties resurfaced over unrelated issues like Iran negotiations or Greenland. European leaders, including Ursula von der Leyen, have publicly stressed the need for reliability, while privately expressing deep frustration.
Similar volatility has defined other actions: the U.S.-backed capture of Venezuelan President Nicolás Maduro, dramatic tariff escalations followed by partial rollbacks, and diplomatic overtures to China despite fierce campaign rhetoric. Foreign officials increasingly describe this as destabilizing unreliability rather than useful unpredictability. As one Arab diplomat noted, unpredictability may pressure adversaries, but reliability is essential for sustained partnerships and long-term planning.
Domestically, rising U.S. consumer prices from tariffs and energy volatility have weighed on approval ratings. While defenders credit Trump with resetting unfair trade deals and confronting adversaries decisively, critics argue the cumulative effect has been higher global inflation, slower growth, strained alliances, and eroded confidence in American commitments.
The Strait of Hormuz may stabilize if ceasefires hold and de-mining progresses. Yet the episode — alongside the tariff war — has delivered a clear warning: in an interconnected world of fragile supply chains, the costs of perceived American capriciousness are measured in inflated energy prices, disrupted trade, fiscal burdens on emerging economies like India, and partners quietly hedging their bets.
As Iran negotiations continue and new trade deadlines loom, the Trump administration faces a defining test. Disruptive leverage may yield short-term concessions, but sustained global leadership demands more than unpredictability — it requires reliability that the past year has too often undermined.
