On eve of Trump’s tariff war, Indian industry braces for severe global consequences

The US’ reciprocal tariffs plan, scheduled to be announced on 2 April (1.30 am on 3 April in India), could reshape the global trade landscape, say industry experts. 

India is unlikely to be spared even as New Delhi has signaled a willingness to lower tariffs on US goods to avoid Trump’s retaliatory action and maintain stable trade relations with Washington. While the US hasn’t outlined the contours of its plan, Trump has made it clear that “all countries" will face reciprocal tariffs.

Trump’s global tariff war has prompted calls from a section of Indian industry for a robust international framework to prevent such trade battles.

“In my opinion, in any war, nobody truly wins, and a trade war brings only chaos," B. Thiagarajan, managing director of home appliances maker Blue Star Ltd, said in a phone conversation.

“World leaders, as they did during World War II, must unite to find a way forward. Without a proper mechanism, nations will keep imposing protectionist measures in the name of safeguarding their interests," he said. “In my opinion, policymakers must work together to establish balance. These conflicts create uncertainty, restricting companies from expanding as they remain unsure of future tariffs. A stable and predictable trade framework is crucial for long-term growth."

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The US Trade Representative’s 2025 National Trade Estimate report this week flagged several Indian policies, including ‘Make in India’, as trade barriers, even as India and the US are engaged in discussions for a bilateral trade agreement, a proxy for a free trade agreement.

Ajay Srivastava, founder of the Global Trade Research Initiative, said the US continues to impose additional tariffs on Indian exports such as steel, aluminium, automobiles, and auto parts despite the trade discussions. “It remains unclear whether the FTA talks involve only India making unilateral tariff concessions or if the US will also reduce its tariffs," said Srivastava.

India being a developing country, its tariffs on average are higher than that of the US, and reciprocal tariffs can significantly impact Indian exports, especially in sectors with high exports to the US, according to an analysis by PricewaterhouseCoopers Pvt. Ltd.

These sectors are textiles and apparels, pharmaceuticals, auto components, and gems and jewellery, PwC said.

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A few likely wins, but more losses

Not all domestic sectors would be hurt by Trump’s tariffs, though. The US’ tariff increase on imports from countries like China could benefit Indian exporters in sectors such as electronics, textiles, and engineering goods.

But sectors like auto components and steel could be hit, with Washington imposing a 25% additional tariff on almost all steel and aluminum imported into the US, and a 25% additional levy on the automobile sector set to come into effect from 2 April.

India’s mobile phone exports, which benefited from the global supply chain diversification after the pandemic and the incentives provided for local production, could also get hit if the reciprocal tariffs cover mobile phones, according to the PwC analysis. 

At present, mobile phones attract a 15% basic customs duty in India and 0% in the US.

“We are closely watching the developments. Once we see if there are any reciprocal tariffs, the products affected, and the quantum of the tariffs, we will accordingly devise our strategy," said Ajay Sahai, director general, Federation of Indian Export Organisation.

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While India has sought to engage with the US to avoid a trade war, some other countries have reacted aggressively to Trump’s tariff war. 

European Commission President Ursula von der Leyen said earlier this week that the European bloc was prepared to hit services exports, including those from Big Tech companies in the US. 

India, on the other hand, recently scrapped its ‘Google tax’, or equalisation  levy on online advertising services rendered to Indian businesses by offshore digital economy firms.

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