India Gears for Potential Tariff Threats Amid Trump’s Trade Policy Shift

28 January 2025: Recent unveiling of President Donald Trump’s “America First Trade Policy” has raised concerns for India, particularly regarding the potential for supplemental tariffs. Although the policy primarily targets China, experts suggest that India must remain vigilant as the US government investigates trade deficits with its partners, which could lead to new tariff measures.

Sources indicate that India is prepared to engage in consultations with the US, aiming to mitigate any adverse effects stemming from these potential tariffs. Biswajit Dhar, a distinguished professor at the Council for Social Development, emphasized the importance of a measured approach, advocating for initial discussions rather than immediate retaliation. He noted that if constructive outcomes are not achieved through dialogue, India should consider proportional responses.

Historically, India has demonstrated its ability to respond effectively to US tariffs. In 2018, when Trump imposed tariffs on steel and aluminium, India retaliated by increasing tariffs on 29 American products, including apples and walnuts. Trade expert Ajay Srivastava highlighted that India could explore various avenues to protect its interests, including actions against US tech companies if necessary.

In FY24, the US emerged as India’s largest export destination, with shipments valued at $77.51 billion and a trade surplus of $35.32 billion. This significant economic relationship underscores the need for strategic negotiations as both nations navigate the complexities introduced by Trump’s trade policy.

While Trump has not explicitly named India in his tariff threats, his administration’s focus on balancing trade and increasing market access suggests that some action regarding India is likely. As the situation unfolds, Indian officials are set to meet with industry leaders to discuss strategies for addressing potential disruptions and ensuring continued trade cooperation with the US.