Reiterating his intention to impose reciprocal tariffs, Trump said Monday, “Reciprocal. If they tax us, we tax them the same amount. They tax us. We tax them. And they tax us. Almost in all cases, they’re taxing us, and we haven’t been taxing them.”
This firm stance underscores Trump’s broader strategy of ensuring parity in trade deals, a hallmark of Trump’s rhetoric and policies during his presidency from 2017 to 2021.
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India, known for its protectionist measures, has often faced criticism for imposing high tariffs on American imports. In his latest comments, Trump specifically cited India and Brazil as nations with exorbitant tariffs, saying, “The word reciprocal is important because if somebody charges us—India, we don’t have to talk about our own—if India charges us 100 per cent, do we charge them nothing for the same?”During a news conference at Mar-a-Lago, Trump remarked that when other countries, such as India and Brazil, send a bicycle to the U.S., they impose high charges, often around 100 or 200. He stated that if they want to impose such fees, the U.S. would respond by charging them the same in return.
This isn’t the first time Trump has flagged India’s tariffs. Trump has earlier referred to India as the “tariff king,” citing specific cases like the high import duties on Harley-Davidson motorcycles. While India subsequently reduced these tariffs, Trump remained critical, stating, “India charges a lot.”
Trump and India: A history of taiff tensions
Under Trump’s first presidency, India-US trade relations were a mixed bag. While strategic ties flourished, the trade partnership faced significant hurdles. In 2019, India imposed retaliatory tariffs on several U.S. products after the US increased duties on steel and aluminum imports. Trump responded by withdrawing India’s preferential trade treatment under the Generalized System of Preferences (GSP), a move that impacted India’s exports to the US.
India’s import and export relationship with the US is substantial. In 2023-24, imports from the US stood at $42.2 billion, while exports to the US reached $77.52 billion, making America India’s largest export destination. Any disruption in this trade flow could have significant economic implications for India, particularly for key sectors like IT, pharmaceuticals, and textiles.
Trump 2.0: The likely impact on Indian trade
The Trump administration, once in power, is likely to adopt US-centric trade policies, pushing India to lower its trade barriers. Howard Lutnick, Trump’s pick for Commerce Secretary, emphasised this approach, saying, “How you treat us is how you should expect to be treated.”
This strategy could create challenges for India but may also offer opportunities. For instance, if Trump raises tariffs on Chinese goods, Indian exporters could step in to fill the gap in the US market. Historically, during Trump’s trade war with China, India benefited from an increased demand for its products as American companies sought alternatives to Chinese suppliers.
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India must tread carefully though. Trump’s focus on “reciprocity” could lead to higher tariffs on Indian exports, making them less competitive in the lucrative US market. This would particularly affect industries like IT and textiles, which rely heavily on American customers. Moreover, the threat of tariffs could deter American companies from investing in India, potentially stalling the country’s economic growth.
During Trump’s previous presidency, his administration’s tough stance on trade cost India its preferential trade status. The possibility of similar moves under a Trump 2.0 administration looms large, especially if India doesn’t address US concerns about market access and tariff barriers.
Also Read: Trump’s trump card can actually aid India’s growth
Any silver lining for India-US trade relation?
Despite trade tensions, Trump’s first term saw a deepening of India-US strategic ties. Events like “Howdy Modi” in Houston and “Namaste Trump” in India showcased the growing camaraderie between the two nations. Both Trump and Indian Prime Minister Narendra Modi shared a common view of China as a strategic threat, which helped align their policies in the Indo-Pacific region.
This alignment could work in India’s favor if Trump returns to power. A strong US-India partnership in defense and geopolitics could offset some of the trade-related tensions. However, India must be prepared to negotiate hard to safeguard its economic interests while leveraging its strategic importance to the US.
India’s path forward requires a delicate balancing act. On one hand, it must protect its domestic industries through tariffs and other measures; on the other, it must ensure that its trade policies don’t alienate its largest export market.
One way to achieve this balance could be through targeted tariff reductions and greater market access for American goods, which might help de-escalate tensions. At the same time, India should push for reciprocal concessions from the US, such as restoring its GSP status.
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Additionally, India must focus on diversifying its export markets to reduce its dependence on the US. Strengthening trade ties with other nations and regions could provide a buffer against any potential fallout from a US-centric trade policy under Trump.
Donald Trump’s latest warning to India serves as a reminder of the challenges and opportunities that lie ahead. While his rhetoric on tariffs is concerning, it also presents India with an opportunity to recalibrate its trade strategies and strengthen its economic fundamentals.
