US Tariffs on India Create Trade Uncertainty, Experts Call for Strategic Approach
New Delhi, February 14 – The recent announcement by US President Donald Trump regarding retaliatory tariffs on India has introduced uncertainty in bilateral trade relations. However, experts believe that a proposed major trade agreement could help strengthen commerce between the two nations.
During his talks with Indian Prime Minister Narendra Modi in Washington, Trump emphasized that India would purchase more oil, gas, and military equipment from the US to reduce the trade deficit. However, he also asserted that the US would not refrain from imposing retaliatory tariffs on Indian goods.
Experts suggest that India must carefully balance domestic industry protection while increasing exports to the US. The Global Trade Research Initiative (GTRI) noted that while both leaders discussed an impending trade deal, details remain unclear. Ajay Srivastava, founder of GTRI, pointed out that it is still unknown whether the retaliatory tariffs will target specific products or entire sectors.
Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO), stressed the need for India to negotiate exemptions for key sectors while strategically leveraging recent tariff concessions on American goods. He suggested that a limited preferential trade agreement (PTA) could mitigate tariff concerns without requiring a full-scale free trade agreement (FTA).
Trade policy expert Abhijit Das highlighted that the uncertainty surrounding retaliatory tariffs could significantly impact trade relations between the two countries. He warned that such tariffs could contradict WTO regulations, potentially leading to trade disputes.
International trade expert Biswajit Dhar echoed similar concerns, stating that Trump's tariff measures might pressure India into reducing tariffs on agricultural imports, or else face higher US tariffs on Indian goods.
In a joint press conference with Modi, Trump emphasized that both nations are exploring a major trade agreement, while also criticizing India's import tariffs on certain American products as unfair and excessive. He stated, "Whatever tariffs India imposes, we will do the same. We are treating India the way it treats us."
During April-November 2024-25, the US was India's second-largest trading partner, with bilateral trade reaching $82.52 billion. This included $52.89 billion in exports from India, $29.63 billion in imports, and a trade surplus of $23.26 billion. Between 2021 and 2024, the US had been India's largest trading partner.
As trade tensions rise, all eyes are now on further negotiations between India and the US to prevent escalation and foster a more stable trade environment.
