How India plans to tackle Trump's tariff threat

India Today

07-08-2025

India may be facing tough times ahead as its trade relationship with the United States hits a rough patch. President Donald Trump's new tariff plan could increase duties on Indian imports to as high as 50%, unless both countries reach a deal soon, reported Reuters.This move could seriously affect Indian exports and put pressure on sectors like garments, jewellery, and chemicals.advertisementSo, what can India do now? Here's a closer look at New Delhi's optionsand what's at stake.CONTINUE TALKING, BUT DON'T BUDGE ON KEY ISSUES
India has already held five rounds of trade talks with the US, but no deal has been reached. The talks failed mainly because of disagreements over opening India's farm and dairy sectors, and the issue of buying oil from Russia.Despite this, Indian officials remain hopeful. A US trade team is expected to visit New Delhi later this month. Discussions are ongoing behind closed doors, and some Indian officials have suggested that India may be open to reducing tariffs on selected US farm items like almonds and cheese, mentioned the report.However, Prime Minister Narendra Modi recently said he's ready to 'pay a heavy price' for protecting Indian farmers, fishermen, and dairy producers, hinting that India will not compromise on core issues.CUT BACK ON RUSSIAN OIL, BUT AT WHAT COST?India buys more than a third of its oil from Russia now, a big jump since the Ukraine war. But recent reports suggest Indian state-run refiners like IOC and HPCL have reduced Russian oil purchases. This is partly due to rising global pressure and shrinking discounts on Russian oil.While India has said it can get oil from other countries like Iraq, Saudi Arabia, and the UAE, giving up Russian supplies could push fuel prices higher at home. This puts the government in a tight spot: balancing foreign policy pressure with the need to keep energy affordable.JOIN HANDS WITH OTHER AFFECTED NATIONSIndia is not alone. Brazil, another BRICS nation, is also facing US tariffs. Brazilian President Lula has said he plans to speak with PM Modi and leaders of China and Russia to coordinate a response.India is also trying to rebuild ties with countries like China and Russia. The Indian foreign and defence ministers have already visited China, and the PM is expected to travel there soon. Russia's President Putin is also likely to visit India later this year.This shift in diplomacy suggests that India may lean more on its BRICS partners and other developing nations to counterbalance the US pressure.WHAT HAPPENS IF TALKS BREAK DOWN?advertisementThe US is a major trade partner for India. In the financial year ending March 2025, India exported around $87 billion worth of goods to the US, including drugs, clothes, diamonds, and petrochemicals. That's nearly 2% of India's total economy.If the US slaps a 50% tariff on Indian goods, many of these exports could dry up. Only pharmaceutical products, which follow a different tax rule, may continue to be shipped.But it's not just goods at risk. The trouble could spill into services too.India is a major hub for software services and has long benefitted from US work visa programmes for tech workers. If tensions rise further, the US may tighten visa rules and outsourcing deals, which could hurt jobs and business in India's growing tech industry.Simply put, India must now play its cards wisely, balancing diplomacy, trade, and national interests.- Ends