Trump’s tariff spree

President Donald Trump’s renewed tariff spree has rattled global markets, reigniting fears of a full-scale trade war. By slapping 25 per cent tariffs on imports from Mexico and Canada, and a 10 per cent hike on Chinese goods, he has thrust America’s top trade partners into economic retaliation mode. Canada and Mexico were swift to respond with countermeasures, while China, seasoned from previous tariff battles, remains poised for strategic retaliation. However, amidst the global fallout, India has artfully navigated Trump’s protectionist storm. Proactively slashing its peak tariffs from 150 per cent to 70 per cent, India aims to shed the “tariff abuser” label that Trump has often wielded against it. Import duties on the top 30 US goods — ranging from crude petroleum to Harley-Davidson motorcycles — now stand at a modest 7.5 per cent or less. This strategic move not only averts immediate US trade retaliation but also signals India’s commitment to integrating into global supply chains, as highlighted by the Union Budget 2025-26.

While India contributes a mere 3.2 per cent to the US trade deficit, its burgeoning pharmaceutical and precious metals exports remain vulnerable. Yet, with Trump’s initial tariff salvo sparing India, a window for bilateral trade negotiations has opened, coinciding with Prime Minister Narendra Modi’s upcoming US visit. Moreover, with US tariffs making Chinese goods pricier, Indian exporters may find new opportunities to capture the American market share, particularly in sectors like textiles, electronics and auto components.

Still, India must tread cautiously. A prolonged trade war could inflate US consumer prices, dampening demand in one of India’s largest export markets. Additionally, any broad-based US trade restrictions might eventually spill over to affect India’s key industries. In this unfolding global economic drama, India’s pragmatic tariff cuts have bought time. But, the larger trade war tremors are far from over.