India’s Strategic Approach to U.S. Tariffs: Focusing on Trade Negotiations
India will not retaliate against U.S. tariffs imposed by President Trump but will engage in negotiations for a trade deal. The Modi administration sees a strategic opportunity ahead of other Asian countries, despite potential economic impacts on Indian industries.
India has decided against retaliating to the 26 percent tariffs imposed by U.S. President Donald Trump on imports from the country. An official revealed that the Indian government is focusing on ongoing discussions for a potential trade deal, emphasizing a clause in Trump’s tariff order that may permit relief for partners making significant improvements to their trade terms.
Prime Minister Modi’s administration recognizes the strategic advantage of initiating trade negotiations with the United States ahead of other nations such as China, Vietnam, and Indonesia, which are facing higher tariffs. Following Trump’s announcement that rattled global markets, India has aligned with countries like Taiwan and Indonesia to eschew counter-tariffs while the European Commission considers imposing additional duties on American products in response to China’s actions.
In February, India and the United States committed to negotiating a trade agreement to be finalized by autumn 2025 to address tariff disputes. Reports indicate that India is willing to reduce tariffs on U.S. imports valued at approximately $23 billion. The Modi administration has also made concessions to appease Trump by lowering tariffs on certain products like high-end bicycles and bourbon, and by retracting a digital services tax impacting U.S. tech firms.
The tariffs could potentially hinder India’s economic growth by 20-40 basis points in the current financial year and severely impact its diamond industry, which relies heavily on U.S. exports, jeopardizing thousands of jobs.
In summary, India is opting for negotiation over retaliation regarding U.S. tariffs, focusing on forging a trade agreement with the United States. This strategy underscores India’s unique position among Asian nations facing similar tariff challenges. By making concessions, India aims to mitigate the economic repercussions of the tariffs, which could adversely affect its growth and key industries.
Original Source: www.ndtv.com
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