 "Trump’s ‘Liberation Day’ is almost here. What’s in store for India?")
Not D-Day, but L-Day is almost here. We are talking about Donald Trump’s “Liberation Day” — when he plans to roll out a set of tariffs that he promises will free the United States from foreign goods. Scheduled for April 2, Trump has vowed reciprocal tariffs on all countries, with the US president saying, “We’ve been talking about all countries - no cutoffs.”
And on Monday, speaking to reporters, he once said that the tariffs he is preparing to announce on Wednesday will be “nicer” than the trade policies of US trading partners. “We are going to be very nice by comparison to what they were. The numbers will be lower than what they have been charging us, and in some cases, maybe substantially lower,” Trump told reporters at the Oval Office.
“Relatively speaking, we’re going to be very
kind ,” Trump said.
But just how “kind” will he be with India? What could be the possible impact of Trump’s tariffs on New Delhi? We examine.
What is Trump’s ‘Liberation Day’?
Before we analyse the likely impact that Trump’s tariff plan could have on India, first let’s understand what the US president has proposed.
As a means to rebalance global trade, US President Donald Trump has said that he would impose reciprocal tariffs on all countries with which the US has a trade deficit. He claims that the US charges low tariffs, while other countries, including India, impose higher duties and trade barriers on American goods. This, he says, leads to a $1 trillion trade deficit that harms American industries and workers.
Neither the White House nor Trump himself have explained what tariffs are coming, or how they’ll be calculated. The administration also hasn’t specified when these new tariffs will take effect.
However, on Monday, White House Press Secretary Karoline Leavitt said that the president will reveal his plans to impose reciprocal tariffs on all of the US’ trading partners on Wednesday. She added that whether details of the tariffs be revealed, depends on Trump himself.
What does India’s trade with US look like?
To understand the possible impact of Trump’s tariffs on India, one needs to analyse the trade ties between the two countries.
From 2021 to 2024, the US has been the largest trading partner of India. The US, in fact, accounts for 18 per cent of India’s total exports. Data reveals that in 2023-2024, the bilateral trade between the two countries was $119.71 billion — $77.51 billion in exports and $42.19 billion in imports, resulting in a trade surplus of $35.31 billion.
Further analysis shows that in 2024, India’s key exports to the US were drug formulations and biologicals ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made cotton garments with accessories ($2.8 billion), and iron and steel products ($2.7 billion).
Meanwhile, India’s imports from the US included crude oil ($4.5 billion), petroleum products ($3.6 billion), coal and coke ($3.4 billion), cut and polished diamonds ($2.6 billion), electric machinery ($1.4 billion), aircraft, spacecraft, and parts ($1.3 billion), and gold ($1.3 billion).
Will Trump’s tariffs hurt India?
For now, no one can give a definitive answer as it is unclear how the tariffs will be applied — will it be at the product level, sector level, or country level. But analysts have provided different answers. For instance, founder of Global Trade Research Initiative, a research group on trade and technology, Ajay Srivastava, told PTI that the impact of the tariffs would depend on the format. It would depend if US imposed a countrywide levy on all products or sector-level tariffs.
Meanwhile, a study by Morgan Stanley suggests that India and even Thailand could see their tariffs increase by four to six percentage points if the US moves forward with its plans to reduce the tariff difference.
Most experts agree, though, that if tariffs do come into effect, some Indian exports would feel the impact more than others. And most concur that India’s electronic exports would feel the hurt. Electronics, particularly mobile phones, form India’s largest export category to the US, with shipments worth $11.1 billion in FY24. With a sectoral tariff differential of nine per cent, exports to the US would be hurt sharply if this was to be implemented.
In agricultural exports, Srivastava, also told PTI that the hardest-hit sector will be fish, meat, and processed seafood, with $2.58 billion in exports facing a 27.83 per cent tariff differential. Moreover, processed food, sugar, and cocoa exports $1.03 billion will also struggle with a 24.99 per cent tariff increase, making Indian snacks and confectionery expensive in the US.
Most trade analysts note that the gems and jewellery sector will be most vulnerable with the US accounting for 30 per cent of India’s total exports in this category. This is followed up by the textile and apparel sector.
However, the experts have said that Trump’s tariffs will most likely have a negligible impact on the automobile industry in India. As the Times of India reported, on automobiles, India’s total exports to the US, at around $10 million are quite insignificant. But if tariffs are imposed on auto components, India could still find opportunities as Mexico, Canada, and China — major suppliers to the US — face even higher tariffs.
In fact, one report by Citi Research estimated that India could lose around $7 billion annually due to these tariffs. Even Devendra Kumar Pant, chief economist at Ind-Ra, told India Today that the new tariffs could reduce India’s GDP growth by 5-10 basis points from the current estimate of 6.6 per cent.
How is India preparing for Trump’s Liberation Day?
With hope and trepidation. India is hoping that Trump stays true to his word of being “kind” when it comes to levying tariffs.
Moreover, over the weekend, US Deputy Secretary of State Christopher Landau held talks with India’s Foreign Secretary Vikram Misri during which the two discussed “ongoing efforts to reduce barriers” as part of trade deal negotiations, per Washington.
Washington’s readout noted that the two officials “discussed ongoing efforts to reduce barriers to achieve a fair and balanced bilateral trade relationship”, referring to the bilateral trade agreement that both sides aim to finalise the first tranche of by autumn this year.
Meanwhile, US President Donald Trump has said that India has agreed to drop the tariffs it imposes on his country “very substantially”.
However, India’s Ministry of External Affairs has not commented on the claims made by Trump.
With inputs from agencies
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