India bracing for Trump’s tariff storm by weighing duty cut options

India, labelled as ‘tariff king’ by US President-elect Donald Trump, is “bracing itself” for possible tariff actions against its exports once he assumes office next month. It is working on an informal strategy, based on anticipation of Trump’s actions and demands, and is identifying items where some duty cuts could be possible without hurting economic interests, sources have said.

“Some discussions and interactions have started within the government on how to handle Trump 2.0. Efforts are on to anticipate his actions and demands… if he does this, what we will do or if he asks for this, how will we respond. Work has already started on that,” a person tracking the matter told businessline.

The analysis and anticipation are being based on how the earlier Trump government, 2017-21, worked and behaved with India and what he said during the Presidential campaign earlier this year on tariffs, particularly in reference to India, the source said.  

“The Commerce Ministry is studying both Trump’s past actions and campaign threats and trying to see what decision he can take once he forms the government. He is a highly unpredictable guy. But we are still trying to brace ourselves for the storm,” the source said. “There are some items where tariffs have just been imposed for the purpose of earning revenue and are not serving any other purpose. Those could be identified for possible tariff cuts,” the source added.  

During his election campaign in Michigan in September, Trump called India a “big abuser” of trade relations between the two countries while the following month, at his campaign rally in Detroit, he said that India was the biggest tariff charger. He warned of reciprocal tariffs of 10 per cent on all countries and 60 per cent on China. The US was India’s largest trading partner with exports worth $77.51 billion and imports worth $42.19 billion in FY24.

 During his first stint as the US President, Trump had imposed penal duties on Indian steel and aluminium, following which India imposed retaliatory tariffs on a number of prominent US exports to India such as apples, almonds, chickpeas, lentils and walnuts. Later, India reached an understanding with the Biden government on the matter and the dispute was resolved.