The Oxford Dictionary defines liberation as “the act or process of freeing a country or a person from the control of somebody else.” Ironically, Donald Trump’s so-called “Liberation Day” tariffs, announced on April 2, have triggered global market tremors, sending indices into the red and unsettling investors’ confidence. With sweeping implications for 90 nations, the reciprocal tariffs threaten to upend global trade, especially for partners like India.
Trump, invoking his “America First Trade Policy” doctrine, claimed that U.S. had been “looted, pillaged, and raped” by its trade partners. His new regime of “reciprocal tariffs” is intended to match foreign duties on U.S. goods—a retaliatory move he deems long overdue.
India, branded the “Tariff King” during Trump’s earlier campaign, finds itself facing a 26% tariff—steeper than Japan (24%) and South Korea (25%), though slightly lower than China’s 34%. The move targets India’s $78 billion worth of exports to the U.S., risking losses of up to $31 billion—around 18% of its outbound trade—according to Emkay Research.
India must urgently devise a counter strategy to tackle the economic jolt triggered by U.S. President, Donald Trump’s record-high reciprocal tariffs, announced on April 2, under the banner of his so-called “Liberation Day.” These sweeping measures are set to affect 90 countries and could deal a staggering ₹1,27,000 crore ($1.5 billion) blow to Indian exports, particularly as a 27% tariff—higher than those imposed on Japan and South Korea—targets New Delhi’s outbound trade. Trump excluded Indian pharmaceuticals from tariff which is a silver lining for India as against high tariff on China. As per data, India exported $8.73 billion worth of pharmaceuticals to the United States during 2023-24 which makes it the highest supplier to the US.
India’s Trade Vulnerability and Corporate Exposure;
India’s share of exports to the U.S. stands at $78 billion, forming nearly 18% of its total exports, making this protectionist onslaught deeply consequential. Trump’s return to aggressive nationalism under his “America First” trade doctrine has shaken global markets, with his inflammatory claim that America has been “looted, pillaged, and raped” by trade partners. His vow to impose “reciprocal tariffs” appears to punish partners like India, which he once labelled the “Tariff King” for its 52% duties on American goods. Though he has dialled it down to 27% for India, this so-called discounted rate has left Indian exporters reeling and sent shockwaves through stock markets, with significant exposure faced by companies like ITC, Raymond, Tata Motors, Welspun, and Sona BLW.
Seizing Opportunity amid Disruption;
Yet within this disruption lies a subtle opportunity. Trump’s tariffs, while damaging, may serve as a wake-up call, propelling India towards greater self-reliance by compelling exporters to diversify markets beyond the U.S., India is likely to strengthen trade with the EU, ASEAN, and the Middle East, thus diluting America’s dominance in its trade basket. This scenario could accelerate FTAs under negotiation with the UK, the EU, and Australia. Moreover, the Production-Linked Incentive (PLI) schemes could bolster manufacturing in sectors worst hit by tariffs like auto components. The current situation also forces a relook at trade negotiations, making India assertive in demanding fairness, which partially led to the restoration of GSP benefits under President Biden. The tariffs have indirectly incentivized companies to shift supply chains from China to India, particularly in electronics and components, presenting a window for India to become an alternate hub.
Sectoral Fallout and Domestic Consequences;
However, the fallout remains severe. Key export-reliant sectors like IT services, and auto parts are expected to suffer sharp revenue contractions. The cascading effect will likely hit industrial states like Gujarat, Maharashtra, and Tamil Nadu with job losses and declining export momentum. The burden of 27% tariffs could also render Indian products non-competitive, prompting American buyers to look elsewhere or demand price cuts. As cheaper steel from Asian producers, unable to sell in tariff-bound Europe or the U.S., floods global markets, it may end up in India, affecting local manufacturers further. Companies such as Himatsingka Seide, Trident, SRF, Apex Frozen Foods, and Ramkrishna Forgings are all forecast to face intense pressure on earnings due to their heavy exposure to U.S. markets.
Strategic Countermeasures India Must Consider;
India, in response, must activate a robust multi-layered strategy. This includes diplomatic channels to seek sector-specific exemptions by leveraging its strategic weight in the Indo-Pacific and its sizable consumer base. New export destinations must be aggressively pursued, and a deeper focus on the India-Middle East-Europe corridor can create fresh economic pathways. Domestically, stimulating demand and supporting manufacturing can act as buffers. Simultaneously, India could lodge a case at the WTO against the U.S., citing arbitrary and unjust trade restrictions. The SBI Research report pegs a 3-3.5% fall in Indian exports to the U.S., but analysts believe that a more dynamic and diversified export base, fueled by PLI-backed manufacturing and IT services, can partially offset the damage. What India needs now is a swift recalibration of its trade and economic engagement, ensuring it is no longer vulnerable to erratic policy swings from Washington.
Global Trade Dynamics and India’s Diplomatic Path Forward;
With Trump’s tariffs putting talks of a long-awaited U.S.-India trade deal in limbo, bilateral ties risk entering uncertain terrain. Despite Modi’s personal rapport with Trump—underscored by his early congratulatory outreach after Trump’s political comeback—the future of trade diplomacy is clouded. India may try to balance the fallout by negotiating defense and tech sector incentives while pushing for the revival of trade dialogue. In the meantime, India must aggressively court partners in Asia, the EU, and the Gulf to build a more resilient trade network insulated from U.S. unpredictability. Even as both nations had pledged to grow bilateral trade from $127 billion to $500 billion by 2030, Trump’s tariff blitz threatens to derail that ambition unless a mid-course correction occurs.
Historical Lessons and Emerging Geopolitical Shifts;
From Washington’s lens, the tariffs are a political tool aligned with Trump’s protectionist instincts, aimed at reviving U.S. manufacturing and safeguarding American jobs in sectors such as textiles, auto, and electronics. Yet, history offers caution. During his first tenure, U.S. tariffs triggered price spikes on consumer goods, forced companies to raise production costs, and made American-made products globally less competitive. Farmers bore the brunt of retaliatory duties, with Chinese tariffs hitting soybeans, pork, and dairy, forcing federal bailouts. The ripple effects also led to inflationary pressures and stock market volatility. Ultimately, many economists viewed the tariffs as a hidden tax on U.S. citizens, with negligible gains in reducing the trade deficit. There is growing concern among analysts that Trump’s new tariff spree could lead to stagflation—a cocktail of stagnant growth and high inflation. Rising costs on imports like cars, electronics, and everyday household goods could temper consumer spending and drag the U.S. economy toward stagnation, if not recession.
India’s Path to Trade Resilience;
Against this backdrop, India must monitor global retaliation. The EU and UK may align with New Delhi, imposing counter-duties on U.S. agricultural and industrial goods. Canada, though diplomatically cautious, could ramp up exports to the U.S. to fill supply gaps left by India. Japan and South Korea may respond with deeper trade ties with India, giving Delhi leverage in the evolving geopolitical landscape. China, navigating its own trade war with Washington, may see a dual play—retaliating against American firms like Apple and Boeing while also exploring tactical cooperation with India in trade, despite simmering border tensions. Trump’s moves risk unleashing a global trade war, unsettling supply chains, and emboldening rival economies to unite against U.S. protectionism.
For now, India must rise above the rhetoric and craft a pragmatic trade doctrine, resilient against geopolitical shocks and rooted in long-term self-reliance. The goal should be to turn adversity into an inflection point—one where India transitions from a reactive player to a strategic architect of its global trade future.
(The writer is a senior political analyst and strategic affairs columnist)
