India is unlikely to retaliate against the recent 26% tariffs imposed by U.S. President Donald Trump on Indian imports. Instead, the Indian government is prioritizing ongoing trade negotiations with the United States, aiming to finalize a deal by autumn 2025. Officials believe that engaging diplomatically positions India favorably compared to other Asian nations facing similar tariffs. To facilitate these negotiations, India has already made concessions, such as reducing tariffs on luxury American goods and eliminating a digital services tax. Additionally, India is considering lowering tariffs on $23 billion worth of U.S. imports.
Despite concerns about the potential impact of U.S. tariffs on sectors like the diamond industry, the Indian government maintains its economic growth projection of 6.3%-6.8% for the 2025/26 fiscal year, assuming oil prices remain below $70 per barrel. However, some private economists have adjusted their forecasts downward, anticipating growth around 6.1%. The government is assessing the situation in collaboration with relevant ministries and exporters’ associations and is prepared to enhance existing export assistance schemes if necessary.
In response to previous criticisms from President Trump labeling India as a “tariff abuser,” Finance Minister Nirmala Sitharaman defended India’s trade policies, emphasizing that tariffs are implemented to support domestic industries rather than to restrict imports. She stated that India is open to reducing duties on certain goods, provided it does not harm local manufacturing capacities.
Commerce and Industry Minister Piyush Goyal has also expressed confidence in the strength of India-U.S. trade relations, indicating no significant concerns over tariffs under the Trump administration. He highlighted the continuous improvement in bilateral ties over the past decade and expressed optimism about further strengthening economic partnerships.
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Overall, India’s strategy focuses on diplomatic engagement and negotiation to address trade tensions with the U.S., aiming for long-term benefits rather than immediate retaliatory measures.
