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Home News India Strategizes Response to Trump Administration’s Imminent Tariff Policies

India Strategizes Response to Trump Administration’s Imminent Tariff Policies

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India is exploring various strategies to navigate the impending tariff policies of the Trump 2.0 administration, including a potential truncated bilateral trade deal and sector-specific arrangements, according to official sources. However, no definitive action plan has been established yet, as decisions will be made based on future developments from the U.S.

Despite President Trump’s aggressive tariff announcements, Indian officials have identified potential advantages in the recently issued “America First Trade Policy Memorandum,” which emphasizes bilateral trade agreements that India could leverage. The memorandum empowers the U.S. Trade Representative to identify countries for negotiation on trade agreements, a process India had previously engaged in during Trump’s first term.

The Indian government is currently consulting various ministries to assess possible actions and will wait for signals from the U.S. before proceeding. The U.S. memorandum also instructs its trade and finance departments to investigate persistent trade deficits and unfair practices from other countries, with a two-and-a-half-month timeframe for analysis.

Trade experts advise that India should avoid making unilateral offers and instead focus on what the U.S. seeks in negotiations. They suggest that if the U.S. imposes additional tariffs, India should consider retaliatory measures to maintain leverage in discussions.

With a significant merchandise trade surplus of over $35 billion with the U.S. in FY24, India remains a crucial trading partner. The sectors where the U.S. may seek greater access include agriculture, automobiles, electronics, and petroleum products, highlighting the importance of strategic engagement in upcoming negotiations.