The question on many minds today is simple: How will Trump’s tariff impact India? As discussions heat up around Donald Trump’s re-election campaign and the possibility of renewed trade wars, India may once again find itself in the crosshairs of shifting U.S. policy. This blog decodes how the “Trump India tariff” stance could influence Indian industries, exports, and overall trade relations.
A Quick Throwback: What Happened Last Time?
During Trump’s presidency (2016–2020), U.S.-India trade saw several ups and downs. In 2019, Trump ended India’s designation as a beneficiary developing nation under the Generalized System of Preferences (GSP), a move that affected $5.6 billion worth of Indian exports. This decision was rooted in concerns about market access and tariffs imposed by India on U.S. goods.
If re-elected, Trump’s return to “America First” could revive protectionist policies, leading to potential tariff on India exports again, especially in sectors like pharmaceuticals, textiles, and IT services.
Why Trump on India Could Matter in 2025–26
Here are a few reasons the Trump India tariff policy is getting renewed attention:
- India–U.S. trade volume is over $120 billion (2023–24), and growing.
- India is expanding exports of generics, electronics, and auto components.
- Trump’s focus on reshoring jobs may target Indian outsourcing hubs.
- U.S. elections in November 2024 could reshape global trade strategies.
In his recent campaign rhetoric, Trump has hinted at universal baseline tariffs on all imports and “punitive tariffs” on countries with trade imbalances—India being one of them.
Sector-Wise Impact of Tariff on India
| Sector | Current Exports to US | Risk from Tariffs | India’s Response Options |
|---|---|---|---|
| Pharmaceuticals | $7 billion+ | High – U.S. imports generics | Diversify to EU, ASEAN |
| Textiles & Apparel | $8 billion+ | Medium – Labour-intensive | Seek bilateral trade agreements |
| IT Services | $20+ billion | Indirect – Visa/travel rules | Upskill and relocate operations |
| Steel & Aluminum | Moderate volume | Already affected earlier | Appeal at WTO |
| Gems & Jewelry | $10+ billion | High value, vulnerable | Target UAE, Hong Kong instead |
Winners and Losers if Trump Returns
Potential Losers:
- Small exporters in sectors like leather, handicrafts, and textiles.
- Outsourcing giants like Infosys and TCS, if visa rules tighten.
- Startups dependent on U.S. fundraising and customer base.
Possible Winners:
- Domestic manufacturers if India adopts counter-tariffs.
- SEZs and export clusters that receive government protection.
- Local brands filling the gap in affected import categories.
Global Examples of Tariff Fallout
To understand the real-world implications of such a policy, let’s look at some parallels:
- China–U.S. Trade War (2018–20): Trump imposed tariffs on over $360 billion of Chinese goods. The result? Supply chains shifted to Vietnam and India, but also led to higher prices for U.S. consumers.
- Mexico: Trump had threatened tariffs unless they controlled migration, showing his willingness to use trade as leverage, not just for economic goals but for broader political messaging.
So, when we talk about “Trump on India,” it’s not just about economics, it’s about strategic diplomacy, tech policies, and workforce dependencies.
What Can India Do to Prepare?
To cushion the blow from any future “Trump India tariff” policy, India needs to act on three fronts:
- Expand Trade Diversification: Strengthen ties with Europe, UAE, Japan, and ASEAN to reduce U.S. dependence.
- Negotiate Bilateral Pacts: Revive efforts for FTA (Free Trade Agreement) with the U.S., or at least push for sector-wise agreements.
- Boost Domestic Production: Leverage schemes like PLI (Production Linked Incentive) to build global competitiveness.
The Indian government has already taken steps, like joining the Indo-Pacific Economic Framework (IPEF) and pushing the “Make in India” initiative harder.
Should India Worry?
While Trump’s rhetoric is aggressive, actual implementation depends on Congress, U.S. business lobby groups, and bilateral diplomatic dialogue. Many U.S. companies depend on India’s skilled labor and raw material supply, making harsh tariffs a double-edged sword.
Also, India is no longer the trade pushover it was decades ago. With a rising middle class, tech innovation, and growing international clout, India today can negotiate from a place of strength.
Conclusion:
To sum up, how will Trump’s tariff impact India? If Trump wins and follows through with tariff threats, India’s exports and service sector could feel the heat. However, the long-term trajectory will depend on India’s policy agility, global alliances, and strategic trade recalibration. For investors, policymakers, and businesses, this is a key trend to watch closely in the run-up to the 2024 U.S. elections and beyond.
