NextFin news, On November 8, 2025, Pakistan Prime Minister Shehbaz Sharif reiterated his gratitude towards US President Donald Trump for resolving the recent India-Pakistan conflict that flared up in early May. Delivered during an address at Azerbaijan's Victory Day parade in Baku, Sharif emphasized Trump's "bold and decisive leadership" that culminated in a full and immediate ceasefire agreement between Islamabad and New Delhi after intense aerial and missile exchanges. This diplomatic breakthrough, Sharif claims, averted a large-scale war and restored peace in South Asia. Trump himself publicly announced the ceasefire on social media on May 10, 2025, describing it as the outcome of talks mediated by Washington.
The conflict originated with India's Operation Sindoor on May 7, targeting terrorist infrastructure in Pakistan-administered Kashmir in response to the April 22 Pahalgam terror attack that killed 26 civilians. Following four days of heavy drone and missile strikes, hostilities ceased abruptly. India continues to reject any third-party role in the ceasefire, maintaining that the resolution was mutual and independent of external mediation. However, Trump has repeatedly claimed credit for brokering peace by leveraging diplomatic pressure and economic sanctions, particularly threatening a 250% tariff on exports from both countries, announced to Indian Prime Minister Narendra Modi and Pakistan's Prime Minister Shehbaz Sharif prior to the ceasefire.
According to Trump’s assertions reported by The Wire, his firm stance on trade relations—explicitly linking peace to ongoing trade negotiations—compelled both nuclear-armed neighbors to halt hostilities. In May 2025, Trump's administration imposed a 50% tariff on Indian goods, which coincided with a sharp 37.5% decline in India’s exports to the US between May and September 2025, even affecting tariff-exempt sectors like smartphones and pharmaceuticals. This economic leverage created significant incentives for de-escalation.
The geopolitical stakes were notably high: the conflict risked escalation between two nuclear-capable armies, destabilizing South Asia and global markets. Trump's approach, combining aggressive economic sanctions with behind-the-scenes diplomatic talks reportedly held on May 9, expedited the ceasefire announcement on May 10. Pakistan’s praise of Trump and repeated attributions of credit highlight a divergence from India’s narrative, reflecting domestic political posturing and broader international strategic positioning.
Analyzing this development through a geopolitical lens reveals a novel application of economic statecraft by the United States under President Trump’s administration. Using tariffs as a coercive tool to influence foreign conflict resolution symbolizes a shift from traditional diplomacy towards hybrid economic-diplomatic strategies. The twin forces of trade pressure and strategic communication were critical leverage points that shortened the conflict duration and avoided protracted warfare, thus preserving regional stability and global economic interests.
This episode underpins the complex relationship between trade policy and geopolitical outcomes. With India’s exports experiencing a substantial downturn linked to tariffs, and with this economic pressure converging with critical diplomatic moments, there is clear evidence that economic considerations were integrally connected to the conflict’s resolution. Furthermore, Pakistan’s public commendation of Trump aligns with its strategic interest in showcasing US support, strengthening its diplomatic profile.
Looking forward, this precedent portends a more assertive US role in South Asian peace dynamics, leveraging economic tools alongside traditional diplomacy. However, the divergence in official acceptance of third-party facilitation between India and Pakistan may complicate future mediation efforts. India's ongoing repudiation of external involvement emphasizes national sovereignty concerns and suggests any US engagement will require careful balancing of influence and respect for bilateral autonomy.
Moreover, the economic ramifications for India underscore the risks associated with trade conflicts spilling over into broader geopolitical tensions. Businesses dependent on export markets may face volatility tied to diplomatic rows, necessitating more resilient and diversified trade partnerships. For Pakistan, enhanced ties with the US could foster increased economic and military cooperation but also risk overreliance on American political goodwill.
In sum, the May 2025 India-Pakistan ceasefire highlights the evolving nature of conflict resolution where economic sanctions, trade tariffs, and strategic diplomacy intersect. President Trump’s administration has demonstrated a willingness to exploit these dimensions to recalibrate regional peace, positioning the US as a pivotal actor in South Asia’s complex security architecture. Future trends will likely see increased use of economic statecraft to manage geopolitical crises, demanding nuanced strategic frameworks and adaptive policy responses from regional players and global stakeholders alike.
