- By Shivangi Sharma
- Thu, 06 Mar 2025 12:15 AM (IST)
- Source:JND
US President Donald Trump has once again intensified his trade war rhetoric, this time targeting India alongside China, as he announced reciprocal tariffs set to take effect from April 2. Despite India having a significantly smaller trade surplus with the US compared to China, Trump clubbed New Delhi with other nations he clams impose unfair tariffs on American products. His move has sparked concerns among global trade bodies, with the International Chamber of Commerce warning that such policies could destabilise the world economy and trigger a crisis similar to the Great Depression of the 1930s.
Trump’s latest announcement came during his joint address to the US Congress on Tuesday night, where he reiterated familiar grievances about trade imbalances. In a speech lasting nearly 100 minutes—the longest ever by a US president in Congress—Trump accused several nations of unfairly taxing American exports while the US maintains relatively lower tariffs.
‘It’s Very Unfair,’ Says Trump
During his speech, Trump singled out India and China for imposing what he described as exorbitant tariffs on American goods. “It’s very unfair. India charges us auto tariffs higher than 100 percent. China’s average tariff on our products is twice what we charge them… This is happening by friend and foe,” he declared.
The US president claimed that his proposed reciprocal taxes would generate "trillions and trillions of dollars" in revenue and create jobs at an unprecedented rate. However, critics have pointed out that Trump’s tariff policies in the past have led to higher costs for American consumers and strained relations with key trade partners.
India-US Bilateral Trade Agreement At Risk
India’s average tariff on US imports is over 10 percentage points higher than US tariffs on Indian goods. Under Trump’s reciprocal tariff plan, India could experience three potential impacts: a general tariff hike of about 6.5 percentage points, a product-specific tariff match raising the differential to 11.5 percentage points, or additional non-tariff barriers leading to even higher tariffs. Retaliatory measures from India could further impact real income and business investment due to trade uncertainty.
India and the US aim to double bilateral trade to USD 500 billion by 2030 and finalise the first phase of a trade deal by fall 2025. During PM Modi's visit to Washington, both sides committed to reducing tariffs and deepening supply chain ties. Trade Minister Piyush Goyal made a sudden trip to Washington to meet the new US Trade Representative, seeking clarity on Trump’s planned reciprocal tariffs and bilateral trade agreement. India is open to lowering tariffs on industrial goods but resists cuts on agricultural products. While a deal is unlikely before April 2, ongoing talks may help India avoid US tariff hikes. Ongoing negotiations may help shield India from steep US duties, but the risk of trade tensions remains high.
Trade Relations Between India And US
Despite Trump’s sharp criticism, trade relations between India and the US have been evolving, with both nations aiming to conclude a “mutually beneficial, multi-sector Bilateral Trade Agreement” by fall 2025. India's commerce ministry has been in discussions with various departments to assess potential trade opportunities, including reciprocal tariff adjustments.
The proposed agreement seeks to address long-standing trade disputes, including market access for American agricultural and industrial products in India, as well as India’s demand for a fairer visa regime for its skilled professionals working in the US. Both countries are also exploring ways to resolve differences over digital taxation, intellectual property rights, and medical device pricing.
