US President Donald Trump delivers remarks on reciprocal tariffs as US Secretary of Commerce Howard Lutnick holds a chart during an event in the Rose Garden entitled 'Make America Wealthy Again' at the White House in Washington, DC (Photo: Brendan Smialowski/AFP)
"Liberation Day" is what United States President Donald Trump calls his plan to free the American economy from foreign influence by adding tariffs -- extra taxes -- on imported goods. The goal is to protect US businesses. On Thursday, he announced these "reciprocal tariffs" but left out certain imports like pharmaceuticals, energy, and specific minerals. This is good news for India's generic drug industry.
A White House factsheet says the exemptions cover things like steel, aluminum, and auto parts already under other tariffs, plus copper, medicines, semiconductors, lumber, precious metals, and energy or minerals not found in the US. It also includes goods that might face future trade restrictions.
How India fits into the tariff picture
Trump set a 26% tariff on Indian goods. This is lower than the 34% tariff on Chinese products and the 46% on goods from Vietnam -- two big competitors of India in the US market. Compared to other Asian countries, India's rate is also less than Thailand's 36% and Indonesia's 32%, but higher than Japan and Malaysia's 24%, South Korea's 25%, the European Union's 20%, and the UK's 10%.
Taiwan, a key player in computer chips, got a 32% tariff. "India is a very tough trade partner," Trump said at a White House event. "The Prime Minister had just visited... he's a good friend, but I told him even friends should treat each other fairly. India is charging us a 52% tax."
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Three views from India
People in India see Trump's tariff plan in three different ways.
First, there’s relief mixed with a little satisfaction. The 26% tariff on India isn’t as low as New Delhi hoped -- especially after offering deals to companies like Tesla, Starlink, Google, and Meta -- but it is better than the higher rates on China (34%) and Vietnam (46%), Bloomberg reported.
Second, global political experts feel betrayed. They wonder if it is fair for India, a key US ally against China in Asia, to face these tariffs. Some ask if Prime Minister Narendra Modi trusted Trump too much and should have kept ties with China stronger.
Third, some business leaders quietly see this as a chance. They think it could push India to rethink its economy, decide who to trade with, and settle old questions from the 1990s about opening up.
India's trade barriers and US exports
India has its own strict and sometimes repetitive rules for testing and approving products like chemicals, telecom gadgets, and medical tools. These make it tough or costly for American companies to sell in India. The White House factsheet says if India dropped these barriers, US exports could rise by at least $5.3 billion a year. This shows how much trade could grow if both sides made it easier to do business.
Trade talks and unanswered questions
The US set a 26% tariff on Indian goods, but it is unclear how they picked that number. One idea is they think India makes it twice as expensive for American companies to sell there. Some wonder if the US counts India’s GST (Goods and Services Tax) -- a tax on most goods and services -- as part of the problem. If so, it might explain the higher tariff.
Even if India lowers GST to help trade, it still protects its farming sector with high import taxes. So, will the US drop India's tariff to 10% -- the global rate Trump wants -- if only some parts of India's economy open up? These details need to be worked out in trade talks, and both sides will have to negotiate carefully.
A chance for India's textile industry
One big opportunity for India is in textiles and clothing. With high tariffs now on products from China and Bangladesh, Indian textile companies could grab a bigger share of the US market. This might bring more companies to set up in India and boost exports. Thanks to its strong textile base and lower tariffs compared to some rivals, India could see more global demand and new investment in this area.
In recent weeks, New Delhi cut import taxes on about 8,500 industrial products, including popular US items like bourbon whiskey and Harley-Davidson motorcycles. This tackled a long-time US complaint. Modi, one of the first leaders to meet Trump after his return to the White House, praised their strong bond. After their meeting, both countries agreed to wrap up the first part of a trade deal by this fall and aim for $500 billion in trade by 2030, up from $127 billion in 2023.
Bringing all three Indian views together -- relief, betrayal, and opportunity -- the takeaway is clear: it is time to rebuild ties and make changes. Modi might look to improve relations with China's President Xi Jinping and work more with other Asian countries in trade networks. Until these trade issues are sorted out, Indian exporters, like many worldwide, will keep facing challenges. Plus, high borrowing costs -- making loans and credit pricier -- are sticking around globally. This could slow down business growth, home buying, and new projects, not just in India but everywhere, affecting the world economy.
The author of this article is a defence, aerospace & political analyst based in Bengaluru.
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