India is unlikely to retaliate against US President Donald Trump’s recent tariff hike on Indian imports, signaling a strategic and measured approach amid global trade tensions. According to a Reuters report citing unnamed Indian officials, New Delhi is focusing on leveraging early trade talks with the US to gain a competitive edge over regional rivals such as China, Vietnam, and Indonesia, which are more severely affected by the new tariffs.
The Donald Trump administration’s move to impose a 26 percent tariff on certain Indian imports has sent ripples through global markets. However, rather than resorting to immediate countermeasures, India is pursuing diplomatic and economic channels to navigate the situation. An official stated that Prime Minister Narendra Modi’s administration is closely examining a clause in the US tariff order that offers exemptions to countries taking steps to address what the US considers non-reciprocal trade practices.
Early trade talks offer strategic advantage
India believes its early engagement with Washington puts it in a favorable position to secure better terms in an eventual trade agreement. The ongoing dialogue with the US is being viewed as a chance to strengthen economic ties and avoid the retaliatory spiral seen in US-China trade relations. Another unnamed official emphasized that India’s stance distinguishes it from peers like China and Indonesia, which are considering or implementing counter-tariffs.
Alongside Taiwan and Indonesia, India has opted out of immediate retaliatory tariffs. In contrast, the European Commission is preparing to impose additional duties on US goods following China’s decision to respond with its own tariffs. India and the US had earlier agreed in February to work toward a comprehensive trade deal by autumn 2025, a timeline that now gains urgency amid the unfolding tariff dispute.
India’s concessions and economic risks
In a bid to ease tensions, India has already made several concessions to the US, including slashing duties on premium American motorcycles and bourbon whiskey, and withdrawing a contentious digital services tax that impacted US tech companies. While these gestures aim to keep trade relations on track, economic experts caution that the new US tariffs could reduce India’s GDP growth by 20 to 40 basis points this fiscal year. Particularly vulnerable is the diamond export industry, which sends over a third of its products to the US and supports thousands of jobs.
