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Trump's tariff decision will be met with a measured and calibrated response from India: Official

Richa Pandey
03 Apr, 2025

In the wake of former U.S. President Donald Trump’s announcement to impose steep tariffs on imports if re-elected, Indian officials have signaled a cautious and strategic approach in formulating their response. A senior government official stated that India’s reaction would be "measured and calibrated," ensuring that its economic interests are safeguarded while avoiding unnecessary escalation in trade tensions with the U.S.

Understanding Trump’s Tariff Policy

During his presidency (2017–2021), Trump adopted an aggressive trade policy, imposing tariffs on several countries, including China and India, under the banner of protecting American industries. His proposed return to power has raised concerns globally, particularly for export-driven economies like India. Trump has hinted at imposing across-the-board tariffs, potentially exceeding 60% on Chinese goods and similar measures on other trading partners, including India.

India’s Likely Strategy

India, being a significant trade partner of the U.S., exported goods worth over $70 billion in 2023, including pharmaceuticals, textiles, and engineering products. Any blanket tariff hike could disrupt this trade flow. However, Indian officials have indicated that instead of retaliatory tariffs, New Delhi may opt for:

1. **Diplomatic Negotiations** – Engaging in bilateral talks to secure exemptions or phased adjustments, as seen during previous U.S. tariff impositions on steel and aluminum.

2. **WTO Dispute Mechanism** – If necessary, India may challenge unfair tariffs at the World Trade Organization (WTO), as it did in 2018.

3. **Diversifying Export Markets** – Accelerating trade pacts with the EU, UK, and African nations to reduce dependency on the U.S. market.

4. **Incentivizing Domestic Manufacturing** – Strengthening the ‘Make in India’ initiative to absorb potential export shocks.

Past Precedents

India has previously adopted a balanced approach when faced with U.S. tariffs. In 2019, after the U.S. revoked India’s preferential trade status under the Generalized System of Preferences (GSP), New Delhi imposed retaliatory tariffs but kept them minimal to avoid a full-blown trade war. Similarly, India may now focus on protecting key sectors like IT services, gems & jewelry, and agriculture while seeking compromises on industrial goods.

Economic and Geopolitical Considerations

Beyond trade, India and the U.S. share strategic ties in defense and technology. A harsh Indian response could strain broader relations, especially as Washington views New Delhi as a counterweight to China. Thus, India’s calibrated stance aims to balance economic pragmatism with diplomatic goodwill.

Conclusion

India’s response to potential U.S. tariff hikes under a Trump administration will likely be cautious, prioritizing dialogue over confrontation. By adopting a measured approach, India seeks to protect its export interests while maintaining a stable economic partnership with the U.S. The coming months will be crucial in determining whether both nations can navigate trade tensions without disrupting their growing strategic alliance.