India holds fire as Trump slaps tariffs Today World News

President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House on April 2, 2025, in Washington, D.C.
| Photo Credit: AP

U.S. President Donald Trump launched a full-scale trade war on Thursday (Wednesday, by U.S. time), announcing massive “reciprocal tariffs”, ranging from 10% to 49%, on U.S. imports from its trading partners around the world, India was not spared, being hit with a 26% tariff on its exports to the U.S. despite ongoing talks for a trade agreement.

The tariffs sparked warnings of reprisal from China and the European Union — which were hit with additional tariffs of 34% and 20% respectively — though India’s reaction was muted. Global markets plunged in response, from Japan’s Nikkei which lost 4% and European markets that dropped more than 2% each, to India’s Sensex, that shaved more than 300 points, while the Nifty dropped as well. In the U.S., the Dow Jones fell over 3% in the first hour of trading, while the Nasdaq crashed 4%.

Despite weeks of ongoing negotiations between U.S. Trade Representatives and Indian officials over a Bilateral Trade Agreement, Mr. Trump announced that India — which he claimed imposed duties of 52% on the U.S. — would face a “discounted” tariff of 26% on its exports to the United States. (Some confusion persisted on the applicable rate, as Mr. Trump announced a 26% tariff, while the Commerce Ministry quoted U.S. documents to say it was 27%.) The Commerce Ministry said it was examining the measures and assessing their impact, including possible “opportunities”.

Trump claims ‘national emergency’

The tariff hikes, which Mr. Trump has said for weeks would herald April 2 as “Liberation Day” for the U.S., were considerably broader and higher than experts had predicted.

The U.S. President invoked his authority under the International Emergency Economic Powers Act (IEEPA) of 1977 to address large and persistent U.S. goods trade deficits, which he called a “national emergency”. He announced a 10% baseline tariff on all countries, which will take effect from April 5, 2025. An individualised reciprocal higher tariff on the countries with which the U.S. has the largest trade deficits will also be imposed from April 9, 2025.

“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Mr. Trump said in his remarks in Rose Garden outside the White House.

Muted Indian response

India’s official response to the announcement was subdued.

An official statement issued on Thursday (April 3, 2025) morning said that the Commerce Ministry is “carefully examining the implications of the various measures”, adding that it is engaged with all stakeholders, including Indian industry and exporters, to assess the impact of the tariffs. It also said, however, that it was studying “opportunities that may arise due to this new development”, noting that India “values its Comprehensive Global Strategic Partnership“ with the U.S., and will continue BTA talks aimed at raising bilateral trade to $500 billion by 2030.

India’s comments were in contrast to other U.S. trading partners who had been slapped with tariffs. The European Union, China, and Canada threatened that there would be “countermeasures”, while Japanese Trade Minister Yoji Muto called the reciprocal tariffs “extremely regrettable”, and South Korea’s Acting President Han Duck-soo ordered support for the country’s domestic auto industry, among the worst affected. Incidentally, Russia, which has minimal trade with the U.S. of just $3.5 billion, did not feature on the tariff list at all.

‘Comparative advantages’

In Delhi, officials pointed out that the U.S.’s penalty of 26% adjusted tariffs for India was lower than other Asian and South Asian countries that are Indian rivals for exports, including Vietnam (46%), Thailand (37%), Bangladesh (37%), Sri Lanka (44%) and Pakistan (30%), which could give India some “comparative advantages”.

India’s diamond and jewellery sector could be hit hard. The Gem & Jewellery Export Promotion Council (GJEPC) said that, given the tariffs, it will be a challenge to sustain India’s current export volume of $10 billion to the U.S market. The United States accounts for more than 30% of India’s annual gems and jewellery exports of $32 billion.

“We urge the Government of India to progress the Bilateral Trade Agreement between India and the U.S., as it would be crucial in navigating the tariff issues and securing long term interest of the sector,” the Council said in a press statement.

Industries take stock

The auto industry, however, does not expect to face any significant impact from the reciprocal tariff as automobiles and auto parts were not covered by it, and were already subject to the 25% duty announced on March 26.

The developments could exacerbate supply chain challenges for aerospace manufacturer Boeing, resulting in aircraft delivery delays. Air India and Akasa Air are among its key clients in India and are already bogged down by the slow pace of new aircraft joining the fleet despite large orders, including for the Boeing 737 MAX 8.

Citing an unnamed official, news agency Reuters reported that the U.S. President planned separate tariffs targeting the pharma sector.

‘Addressing trade imbalances’

In his remarks, Mr. Trump named India along with Thailand and Vietnam as examples of what he called “vicious attacks” on U.S. workers, using the tariffs on motorcycles as an example. In fact, the Modi government has lowered tariffs on foreign motorcycles down from 100% in 2017 in a series of cuts; in the latest Union Budget in February, Finance Minister Nirmala Sitharaman reduced those tariffs from 50% to 30%.

Also read: Trump tariff announcement highlights

In the executive order Mr. Trump signed shortly after the announcement, the White House said that “addressing trade imbalances” was a major priority, comparing India’s simple average most-favored-nation (MFN) tariff rate of 17% with China’s 7.5% and the EU’s 5% as “significantly higher” than the U.S.’s 3.3%. It also criticised India, among other countries, for high tariffs on items like cars, network switches and routers, rice in the husk, and apples, citing the USTR’s report on “Foreign Trade Barriers” released earlier this week that contained a particularly scathing chapter on India.