As US President Donald Trump ramps up his trade agenda, India is preparing a multi-pronged strategy to counter any potential economic fallout. The Modi-led government is exploring measures ranging from reducing tariffs to importing more US goods, aiming to ease tensions and maintain healthy trade relations with its largest trading partner, Bloomberg reported.
For the fiscal year ending March 31, India reported a $35.3 billion trade surplus with the US, making the relationship economically significant. However, Trump’s recent threats of increased tariffs on countries with trade surpluses, including those in the BRICS group, have raised alarms in New Delhi.
Indian officials are exploring several options to address potential trade tensions with the US. One measure under consideration is reducing import tariffs on specific goods such as bourbon whiskey, pecan nuts and agricultural products. Additionally, India may increase its imports of US whiskey, steel, oil and other commodities to help narrow the trade imbalance.
Another strategy involves targeting tariff reductions for goods originating from US states critical to the Republican Party, the report further quoted sources as saying.
In a broader context, India is also weighing the possibility of a limited trade deal with the US, an idea previously explored during Trump’s first term. This plan could include adjustments to “most-favored nation” tariffs, which are applied to countries lacking bilateral trade agreements with India, as part of efforts to enhance economic ties and mitigate potential trade disputes.
India’s proactive measures are also shaped by global trade dynamics. With the US-China trade war escalating, Indian officials see an opportunity to capitalise on higher tariffs on Chinese goods, the report said. Sectors like electronics, high-tech machinery and chemicals could gain a competitive edge in the US market.
India anticipates pressure from the Trump administration on issues like data regulations, intellectual property rights and e-commerce rules. New Delhi is also set to repatriate at least 18,000 illegal Indian immigrants from the US.
On his first day in office, Trump announced plans to impose a 25% tariff on Mexico and Canada and hinted at increased duties for BRICS nations. Across-the-board tariffs of 10%-20% could inadvertently benefit Indian exports of auto components and metals.