Tariff tangle

India is racing against time to stop or at least slow down Donald Trump’s tariff juggernaut. In line with his ‘America First’ policy, the US President has announced tit-for-tat action from April 2 against India and other nations that have been imposing higher levies on imports from the US. New Delhi is looking to find an amicable solution to the vexing problem under the framework of a mega trade deal with Washington. Commerce Minister Piyush Goyal is already in the US, holding negotiations regarding the deal, which is expected to be finalised by the year-end. The million-dollar question is: Can India delay the inevitable, and for how long?

After their meeting last month, Trump had lauded Prime Minister Narendra Modi as a “better, tougher negotiator”, but he also made it clear that India would not be exempted from reciprocal tariffs. His clinching argument was that “nobody can argue with me” on this issue. However, Delhi continues to hope that Team Modi will pull a rabbit out of the hat in the form of a mutually beneficial outcome.

India’s diplomatic approach is to play it safe and not infuriate Trump, unlike the belligerent stand adopted by countries like Canada and China. Canadian Prime Minister Justin Trudeau has called American tariffs “very dumb” and accused the US President of appeasing Russia, while Beijing has warned that it is ready to “fight till the end” if the US is hell-bent on waging a tariff or trade war. Ukrainian President Zelenskyy’s nightmarish experience at the Oval Office has taught India that things can easily go from bad to worse if you are in Trump’s bad books. The US was India’s largest trading partner in 2022-23, with the bilateral trade amounting to $190 billion; the two sides are keen to raise it to $500 billion by 2030. The long-term picture might prompt Delhi to bite the tariff bullet.