Trump’s New Trade War? ‘Liberation Day’ Tariffs and Their Consequences for India
- India International Affairs North America South Asia
Shreya Naskar- 0
- 7 minutes read
The global trade landscape is on the brink of a major shift as former U.S. President Donald Trump is set to unveil his highly anticipated ‘Liberation Day’ tariffs. Scheduled for announcement at 4:00 PM local time (1:30 AM IST) from the White House’s Rose Garden, these tariffs are expected to impose a substantial economic impact on several nations, including India.
While Trump has long advocated for reciprocal tariffs, the White House has acknowledged that key details are still being finalized. As the countdown begins, global economies are bracing for potential disruptions, with India preparing strategic responses to counter any adverse effects. The core philosophy behind Trump’s tariff policy is based on his belief that the United States has been economically disadvantaged by other nations through imbalanced trade practices. He has repeatedly claimed that America has been “ripped off” due to high tariff rates imposed by foreign governments on U.S.-made goods while enjoying relatively lower tariffs in the U.S. market. “This marks the beginning of Liberation Day in America,” Trump has stated. “We will charge nations for conducting business in our country while they take away our jobs, wealth, and resources. Over the years, both allies and adversaries have exploited the U.S. economy.” While the specifics regarding the percentage increase and targeted nations remain uncertain, Trump has indicated that the tariffs will apply universally, sparing no country. This could mean significant repercussions for major trading partners, including India, Brazil, Vietnam, and several Southeast Asian and African nations. Additionally, a CNN report highlights that European Union member states.
Impact on Indian Industries and Trade
Trump’s proposed tariff plan is expected to have far-reaching consequences on India’s exports to the U.S., particularly in agriculture, pharmaceuticals, and electronics.
1. Agriculture Sector at Risk: Shrimp, dairy, and processed food exports could face tariffs as high as 28.2%, making them significantly more expensive for U.S. buyers. This could reduce demand for Indian agricultural products, affecting farmers and exporters.
2. Pharmaceutical Industry Concerns: India is a major supplier of generic medicines to the U.S., and a tariff hike could make Indian drugs less competitive. An estimated 10% increase in tariffs could disrupt supply chains and boost U.S. pharmaceutical companies at India’s expense.
3. Electronics Sector in Trouble: Indian-made electronics and components may face tariffs of up to 7.2%, impacting manufacturers and IT hardware exporters. This could reduce India’s competitiveness in the global electronics market, affecting companies like Tata Electronics and Dixon Technologies.
4. Jewellery and Textile Industries: The jewellery and textile industries could also see a rise in tariffs, impacting India’s gold and diamond exports to the U.S.
5. Automobile and Industrial Goods: If tariffs extend to automobiles, steel, and machinery, they could impact India’s engineering and manufacturing exports.
India’s Response Strategy
While many countries are considering retaliatory measures, India has adopted a measured, strategic approach.
1. Wait-and-Watch Approach: The Indian government is assessing the final impact of Trump’s tariffs before taking any immediate action. Commerce Ministry officials have outlined four possible scenarios, depending on whether the tariffs are product-specific, sector-specific, country-specific, or secondary levies.
2. Bilateral Trade Negotiations: According to reports from The Indian Express, India and the U.S. have already agreed on a framework for a bilateral trade deal. This deal could involve India lowering some tariffs on American goods in exchange for exemptions on key Indian exports. Minister of State for Commerce and Industry, Jitin Prasada, stated that India’s tariff policy aims to balance trade while protecting domestic industries.
3. Strengthening Alternative Markets: Indian exporters are being encouraged to diversify trade relationships with nations in Europe, Latin America, and Southeast Asia. Expanding into non-U.S. markets could reduce dependency on American buyers.
4. Possible Counter-Tariffs Against U.S. Exports: If Trump’s tariffs hit India hard, New Delhi may impose retaliatory tariffs on U.S. exports such as almonds, apples, and Harley-Davidson motorcycles—similar to past trade disputes.
5. Strengthening India’s Domestic Industry: The Indian government is also pushing initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’ to boost local production and reduce reliance on U.S. imports.
As Trump prepares to launch his ‘Liberation Day’ tariffs, the global economic landscape could undergo significant changes. India, a key U.S. trading partner, is bracing for potential disruptions but is taking a calculated approach to mitigate risks. With bilateral negotiations, strategic trade diversification, and policy reforms, India aims to minimize the negative impact while strengthening its position in global trade. While the true impact of these tariffs will only be seen in the coming months, India’s response strategy will be crucial in shaping its trade future.
