U.S. President Donald Trump has once again shaken up global trade dynamics by formally announcing a series of reciprocal tariffs. His policy is clear: if a country imposes high tariffs on American goods, the U.S. will respond in kind. However, in the case of India, Trump has shown restraint—choosing to impose a 26% tariff, merely half of India’s 52% tariff on American goods. He attributes this leniency to his “good friend,” Indian Prime Minister Narendra Modi. This preferential treatment reflects the close personal and strategic ties between the two leaders. But is it a win for India? While the Modi government might welcome Trump’s decision as a sign of goodwill, the broader implications for India’s economy remain concerning. The Leader of the Opposition, Rahul Gandhi, has already raised alarm bells, warning that the U.S. decision could have a devastating effect on India’s economic growth. There’s merit to Gandhi’s concerns. India’s export sector, already grappling with global slowdowns and supply chain disruptions, could face additional pressure due to these tariffs. Many Indian businesses rely on access to the vast American consumer base, and higher tariffs could shrink their competitiveness, cutting into profits and job creation. Additionally, foreign direct investment (FDI) from the U.S. may also take a hit as companies reassess the cost-effectiveness of operating in a higher-tariff environment. Beyond the immediate economic impact, the long-term effects of Trump’s tariff policy could reshape India’s global trade strategy.
The Modi government, which has championed the “Make in India” initiative, may need to accelerate domestic manufacturing to reduce dependency on exports to the U.S. India may also need to diversify its trade relationships, seeking stronger partnerships with the European Union, Southeast Asia, and Africa to cushion the impact of U.S. tariffs. At the same time, the Modi administration has an opportunity to negotiate better trade terms with Washington. While Trump’s decision to reduce India’s tariff burden compared to other nations is a diplomatic gesture, India should not take it for granted. Instead, it should engage in constructive discussions to establish a more balanced and sustainable trade framework that benefits both nations. Reducing its own tariffs on American goods could foster goodwill and prevent further retaliatory measures from the U.S. As for Trump, his decision is in line with his broader economic philosophy: America first. He has consistently championed policies that he believes will restore the country’s economic supremacy. If the U.S. has suffered under trade imbalances for years, why shouldn’t it fight back? His approach may be controversial, but from an American perspective, it is logical. The U.S. economy, after all, must look out for itself first. Ultimately, Trump’s move should not be viewed solely as an attack on India but as a broader shift toward fairness in global trade. If India has benefited from asymmetric tariff policies in the past, it’s only fair that it re-evaluates its stance. Trump is making America wealthy again—why shouldn’t he?
