On April 4, 2025, the Trump administration formally announced the reintroduction of sweeping “reciprocal tariffs.” These proposed duties aimed to match or exceed the import tariffs other nations impose on American goods. Despite their aggressive tone, they have deferred their actual implementation by 90 days, bringing the effective date to early July 2025. This delay is not a retreat—it’s a calculated strategy to buy time for trade negotiations and to isolate high-priority targets like China.
For India, the proposed framework includes a flat 26% tariff on a wide range of goods exported to the U.S., including auto components, jewellery, processed food, and textiles. Though yet to be enforced, the threat of these tariffs has stirred significant diplomatic and economic movements.
Strategic Use of the 90-Day Window
The pause in implementation is part of a broader tactical play. For one, it offers the U.S. leverage in bilateral negotiations, particularly with countries like India. Both governments are currently accelerating discussions to finalise the first phase of a trade deal by autumn 2025. The two sides are eyeing a long-term target of $500 billion in bilateral trade by 2030.
India, in return, is reportedly considering substantial tariff cuts on over half of its $23 billion worth of U.S. imports. This would be the country’s most significant tariff liberalisation effort in recent years. Sectors like whiskey, large motorcycles, defence equipment, and LNG are at the centre of these concessions.
The Global Trade Order is Shifting
The Trump tariffs represent more than a new tax regime—they signal the breakdown of the global trade model that has existed since World War II. For decades, the U.S. played the role of global consumer, running deficits while the rest of the world produced, earned in dollars, and recycled that wealth back into U.S. Treasuries and capital markets.
This arrangement gave the U.S. extraordinary economic freedom. However, as emerging economies became stronger, more self-sufficient, and digitally empowered, the model began to crack. Countries like China, India, and Vietnam started trading more within their regions and building local demand. They began shifting foreign exchange reserves away from the dollar and, in some cases, settling cross-border transactions in local currencies. The turning point came when the U.S. froze the dollar reserves of certain countries during geopolitical crises—proving that even the dollar could be weaponised.
America’s New Playbook: Balance or Penalty
Under Trump’s revived trade doctrine, the U.S. is demanding numerical symmetry in trade relationships. If a country exports more to the U.S. than it imports, it may face proportionate penalties. Economists argue that this crude, transactional model ignores supply chain dynamics, development stages, and domestic consumption capacity. Yet politically, it’s resonant—and effective.
Adding to this, Trump has controversially argued that VAT and GST systems abroad act like hidden tariffs against U.S. exports. While this interpretation defies global tax norms, it creates a narrative that justifies further U.S. protectionism in the name of fairness.
India’s Calculated Patience
Unlike China, which immediately responded to U.S. tariffs with a 34% retaliatory duty on select American goods, India has chosen a measured approach. With the 90-day window open until early July 2025, New Delhi is adopting a wait-and-watch strategy. This makes sense. While India’s trade exposure to the U.S. is significant, it is not existential. Moreover, Indian exporters are no strangers to navigating protectionist environments.
Sectors like seafood (particularly shrimp), garments, and leather goods, which have high dependency on the U.S. market, would have been hit hardest. The delay offers short-term breathing room for these exporters, who are now hoping for a negotiated resolution rather than a tariff war.
India’s Opportunity in a Fragmented Global Order
Beneath the immediate tension lies a long-term opportunity for India. The global trading system is being rewired, and India, with its demographic edge, growing domestic market, and relative political stability, is well-placed to benefit.
To capitalise on this moment, India must accelerate structural reforms. Domestic manufacturing in electronics, pharmaceuticals, and defence needs deeper support. India must continue attracting supply chain shifts away from volatile regions like China. And critically, the government must invest in ease of doing business, logistics infrastructure, and trade facilitation, while avoiding overly protectionist instincts.
India is not overly reliant on one market, nor is it burdened with demographic stagnation like many developed economies. This combination gives it a rare edge—if it can execute on it.
Trade Negotiation Hurdles Between the U.S. and India
Despite goodwill, challenges remain. India’s agricultural tariffs are a sticking point. American exporters want greater access to India’s dairy and poultry markets, but cultural and religious concerns limit India’s willingness to comply.
Data localisation policies are another issue. U.S. tech companies have raised objections to India’s demand that consumer and financial data be stored only within the country. Likewise, India’s stance on IP protection remains a friction point in digital trade.
These policy clashes reflect broader strategic priorities: India favours strategic autonomy and developmental pragmatism, while the U.S. pushes for market liberalisation and IP alignment.
Global Response and Realignment
The rest of the world is also adjusting to U.S. trade unpredictability. The EU has already inked trade pacts with Japan and Mercosur to diversify trade flows. China is deepening its trade with ASEAN via RCEP. Countries are also filing WTO complaints to contest U.S. tariffs, especially those imposed under national security claims.
As global trade pivots away from U.S.-centric models, regional blocs and currency alternatives are rising. In this reshaping, India can either play catch-up—or co-author the new rulebook.
What Should Investors Do?
Periods of geopolitical volatility are usually accompanied by poor investment decisions driven by fear or overconfidence. Some investors may consider exiting markets to wait for clarity; others might see falling prices as an invitation to “buy the dip.” Both approaches are speculative.
A more disciplined strategy is to continue systematic investing, diversify across geographies and asset classes, and rebalance portfolios based on personal goals—not headlines. Timing the market in moments of trade war and political brinkmanship is a losing game. But long-term resilience, if built calmly, often pays off.
Final Thoughts
The Trump tariffs, though not yet implemented, have already shaken the global trade architecture. They tell us that the age of frictionless globalisation is over. The American consumer market is no longer a guaranteed open door. The dollar is no longer a neutral reserve. The WTO is no longer the only referee.
In this environment, the world is searching for new anchors of trade, trust, and demand. India isn’t that anchor yet—but it could be. With clarity, confidence, and careful execution, India has a unique chance to move from the margins of global trade architecture to its centre.
This might just be India’s moment—not only to adapt to the new rules of global trade, but to help write them.
(The author is Cofounder & Executive Director, Prime Wealth Finserv Pvt. Ltd.)
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
