India 'studying' US President Trump's 25% tariff threat

In response to United States President Donald Trump's unexpected declaration of a 25% tariff on goods exported from India to the US, the Indian government has stated it is evaluating the impact of this decision while pledging to safeguard its national interests. The announcement, which also includes a 'penalty' related to India's oil imports from Russia, was met with a careful statement from India's Ministry of Commerce and Industry.

The Ministry emphasised that negotiations on a trade deal between India and the US have been ongoing and said, "The Government has taken note of a statement by the US President on bilateral trade. The Government is studying its implications. We remain committed to that objective." This statement indicates India's determination to pursue a balanced and mutually beneficial trade agreement.

Highlighting the significance of protecting the welfare of farmers, entrepreneurs, and Micro, Small and Medium Enterprises (MSMEs), the Ministry referred to a recent free trade agreement with the United Kingdom, claiming it would take necessary actions similar to those enacted in past agreements.

President Trump characterised India as an ally while simultaneously criticising its trade practices. He highlighted concerns over India’s tariffs, describing them as excessively high, and accused New Delhi of maintaining non-monetary trade barriers. Additionally, he pointed to India's military acquisitions from Russia and its substantial oil purchases as reasons for the newly instituted penalties. In his post on social media, he stated, "India will therefore be paying a tariff of 25%, plus a penalty for the above, starting on August first." He also emphasised the importance of the trade deficit, stating, "We have a massive trade deficit with India!".

Some experts and officials in India have pushed back against Trump’s portrayal of India's trade barriers, arguing that his focus is narrow and ignores the broader economic relationship between the two countries. They assert that the US has gained immensely through services, investments, and educational ties with India and that this value is not reflected in goods trade alone. According to government data, India recorded a trade surplus of $41.18 billion with the US during the fiscal year 2024-25, while also noting the substantial revenue the US generates from various sectors, including education and defence.

Critics of the newly proposed tariffs have warned that such actions could disrupt robust trade in sectors like marine products, pharmaceuticals, and automobiles, significantly impacting bilateral relations.

The announcement has drawn sharp criticism from various political factions within India. Congress general secretary Jairam Ramesh challenged Prime Minister Narendra Modi to respond assertively to the US, invoking the strong stance of former Prime Minister Indira Gandhi. Ramesh pointed out that Modi's prior engagements with Trump did not yield the expected benefits, stating, "All that ‘taarif’ between him and ‘Howdy Modi’ has meant little." Furthermore, other opposition leaders voiced their discontent with the government's handling of the situation, calling for more transparency and legislative discussions.

As India navigates this challenging phase in US-India trade relations, officials are preparing for continued negotiations. A delegation from the US is expected to arrive in India for further discussions aimed at resolving contentious issues. Amidst the concerns over new tariffs, industry leaders express cautious optimism that constructive dialogue can lead to a positive outcome for both nations. The Indian negotiating team is poised to reassess its strategy to ensure that any agreement takes into account the unique needs of its domestic economy while maintaining a cooperative relationship with the United States.