Waking up to Trump’s trade punch; India’s 26% tariff shock
With India caught in the US tariff crosshairs, several Indian sectors that export to the country, such as textiles, auto, and agriculture will be bracing for impact
Pitch Feature
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In what can be described as a geopolitical midnight attack, US President Donald Trump unveiled a fresh batch of “reciprocal tariffs” on April 2, while half the world was asleep. India, ever the familiar frenemy in these sagas, found itself slapped with a 26% tariff on its exports to the United States.
Announced under the banner of “Liberation Day” Trump’s move targets countries he claims have been “taking advantage” of the U.S. with high import duties. India, he declared, was “very, very tough,” before reassuring the crowd that Prime Minister Modi was still a “great friend.” This friendship, alas, apparently doesn’t extend to trade exemptions.
Why now—and why us?
According to Team Trump, India’s average tariff on U.S. goods stands at a stiff 52%, factoring in not just duties but also non-tariff barriers and a not-so-subtle swipe at alleged currency manipulation. So, in what can only be described as a maths-meets-theatrics moment, the U.S. decided to hit back with exactly half of that: 26%.
Indeed, that has been the case with most countries, which are taxed at half the rate the US is taxed. Trump framed it as common sense. Call it trade policy by calculator—or perhaps vibes.
What's on the chopping block?
The U.S. and India clocked bilateral trade worth $124 billion in 2024, with India exporting $81 billion and importing $44 billion. That surplus of $37 billion? Now in the crosshairs.
In a major relief to Indian pharma companies, Trump has exempted Indian pharmaceuticals, a major export segment, from the tariffs. As the White House breaks down the meat of their bombastic boss's sizzle, further developments are expected. India exported $8.7 billion worth of pharmaceuticals last year to the U.S., which is still struggling with prescription affordability.
Several other Indian sectors are bracing for impact:
Textiles: India’s textile and apparel sector, a staple of subcontinental exports, may no longer look like such a bargain once tariffs are tacked on.
Auto components: Indian suppliers to U.S. automakers might find their orders shifting to more tariff-friendly nations. Or just back home, if the MAGA agenda has its way.
Agriculture: From Basmati rice to turmeric, Indian agri-exports might lose their masala if American buyers decide an extra 26% is too spicy.
Why isn't everyone screaming?
The timing was smart. Trump dropped the tariff bomb late in the afternoon U.S. time—which was 1:30 am in India. By the time bureaucrats were awake and scanning the headlines, the news cycle had already churned on. Result? A weirdly muted outrage, punctuated only by a few diplomatic murmurs and some disgruntled exporters wondering why their inboxes are full of panicked clients.
Even the markets took their time reacting—perhaps assuming it was just another episode in the ongoing “Tariff Tantrum” series.
India’s move: Diplomacy or dhamaka?
Commerce Minister Piyush Goyal, who just wrapped up a diplomatic tour in Washington, had previously struck a conciliatory tone. No threats yet—just an emphasis on “dialogue” and the quiet possibility of taking things to the WTO.
That being said, India could retaliate with its own targeted tariffs on U.S. imports—everything from almonds to Apple products has been in the retaliatory mix before.
But with a $37 billion trade surplus to protect, New Delhi might just prefer to keep things civil. At least until the screams and or whimpers on Dalal Street and in Lutyen's Delhi die down.
Global fallout?
India’s not alone in this round of tariff roulette. And just in case anyone thought this was a targeted move, Trump’s tariff tirade was as sweeping as it was specific. Australia, a longtime ally, didn’t get off scot-free—Trump imposed tariffs even on external territories, including uninhabited islands like Heard Island and McDonald Islands. No residents, no exports, but still, they’re now officially tariffed. Symbolism? Definitely. Strategy? Debatable.
Major trading partners also found themselves on the receiving end:
- China was slapped with a steep 34% tariff, on top of the 20% tarrif slapped on the country in February, making it 54% in total, and reigniting old anxieties about a new trade war between the world's two largest economies.
- Vietnam got hit with a whopping 46%, positioning it as this round’s surprise scapegoat.
- The European Union was served a more “moderate” 20%, though Brussels is reportedly not amused.
- Mexico and Canada managed to duck this round, likely thanks to the still-warm NAFTA 2.0 afterglow and previously imposed taxes on auto parts as well as “discounted tariffs” on Canadian energy.
So yes, it's a global tariff buffet. And everyone’s been served—whether they’re at the table or not. Protectionism is clearly back on the menu. The only question is whether other countries will quietly grit their teeth and absorb the hit or if they’ll turn this into another full-blown trade war sequel. No one, except maybe cable news producers, wants that.
Bottom line
Trump’s tariffs are less a bolt from the blue and more a sequel we all saw coming—just not at 1:30 AM IST. For India, this is both a wake-up call and a reminder that global trade now runs on emotion, electoral cycles, and Trump’s sleep schedule.
While the 26% sting is real, the response will likely be more Gandhian than gladiatorial. For now.
But what if you’re an Indian exporter? Time to call your U.S. clients. And maybe invest in some aspirin. It's going to be a long quarter.
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