India averts first of Trump’s tariff volleys; China, Mexico & Canada take the initial hit

Trump’s first executive order on February 1 to impose trade tariffs did not mention India, signalling that bilateral trade negotiations may be on the cards later this month when Prime Minister Narendra Modi is scheduled to visit the US.

US President Donald Trump has kicked off his promise of protectionist trade policies, imposing a 25 per cent tariff on Canada and Mexico, and 10 per cent on China effective from Tuesday.

The move has triggered a fresh trade war with America’s top three trade partners, which are also the largest contributors to its nearly $1 trillion trade deficit.

Despite repeatedly criticising India’s tariff structure, Trump’s first executive order on February 1 to impose trade tariffs did not mention India, signalling that bilateral trade negotiations may be on the cards later this month when Prime Minister Narendra Modi is scheduled to visit the US.

International trade experts said that India has already begun lowering tariffs to favour US exports in a bid to avoid Trump’s tariffs. Duties on items primarily exported by the US, such as motorcycles with an engine capacity below 1,600cc, ground installations for satellites, and synthetic flavouring essences, among others, were slashed in the Union Budget 2025-26 presented on Saturday.

Meanwhile, exporters said that the current 10 per cent tariffs imposed on Chinese goods would create an opportunity for more Indian goods to enter the US market. According to an analysis by Oxford Economics, India was the fourth-largest beneficiary of the trade diversions that occurred between 2017-2023 after Trump launched a tariff war with China in his first term.