New Delhi, August 1, 2025: In response to U.S. President Donald Trump's abrupt announcement of a 25% tariff on Indian exports, India is considering measures to strengthen trade relations with the United States, particularly by increasing imports of American goods such as natural gas, communication equipment, and gold. However, Indian officials involved in the discussions have confirmed there are no immediate plans to impose counter-tariffs.
Officials in New Delhi expressed surprise and disappointment at Trump’s decision but emphasized their commitment to maintaining constructive trade negotiations. India is exploring ways to reduce its trade surplus with the U.S., which was approximately $43 billion last year, by boosting imports over the next three to four years. Notably, India has no plans to purchase additional U.S. defense equipment, including the F-35 fighter jets proposed by Trump during Prime Minister Narendra Modi’s February visit to the White House.
India remains committed to securing a “fair and mutually beneficial” trade agreement while prioritizing the protection of its farmers and small businesses. The government has reserved its rights under the World Trade Organization (WTO) to potentially impose retaliatory tariffs on U.S. steel and automobiles in the future if needed.
On Thursday, Commerce Minister Piyush Goyal told Parliament, “We are evaluating the impact of the current situation and consulting with exporters and industry groups. All necessary steps will be taken to protect national interests and ensure progress.”
U.S. Treasury Secretary Scott Bessent, speaking to CNBC on Thursday, expressed frustration with the slow pace of trade talks, stating that the U.S. trade team is disappointed and that India must take the next step. He also criticized India’s close ties with Russia, accusing it of not being a “good global partner” due to its continued purchase of Russian oil and weapons.
Despite the personal rapport between Trump and Modi, Trump’s recent remarks have strained relations. On Wednesday, he accused India of having “excessively high” tariffs and described its trade barriers as “strenuous and obnoxious.” He further warned of punitive measures due to India’s energy and arms purchases from Russia, though he later downplayed the issue on Truth Social, stating, “I don’t care what India does with Russia,” and referred to India and Russia as “dead economies.”
Last year, the U.S. trade deficit with India was around $43 billion, ranking India 11th among countries with which the U.S. has a trade deficit. For comparison, the U.S. trade deficit with Vietnam was $121 billion, and earlier this month, Trump announced a 20% countervailing duty on Vietnamese goods.
Analysts are uncertain about how seriously to take Trump’s statements. Abhijit Das, a New Delhi-based international trade expert, remarked, “Trump is unpredictable. This could be a tactic, similar to what he did with the European Union, where he initially threatened 30% tariffs but later reduced them to 15%.”
On Thursday, the Indian rupee and stock market experienced slight declines, with the rupee dropping 0.4% to 87.7375 before partially recovering, and the NSE Nifty 50 index falling 0.5%. India remains cautious about opening its agricultural and dairy sectors, a key U.S. demand, due to domestic political sensitivities.
Former Commerce Secretary Ajay Dua noted that India is unlikely to make significant energy purchases or large-scale investments in the U.S., suggesting that India needs to adopt a more flexible approach in negotiations. India has signaled it is not interested in purchasing F-35 fighter jets but is keen on jointly developing and designing defense technology domestically.
Trump’s recent comments, including his claim that he brokered a four-day India-Pakistan conflict ceasefire in May—a claim India denies—could further complicate bilateral relations. During warmer times in February, Modi invited Trump to visit India for a potential Quad summit involving the U.S., Japan, India, and Australia. A U.S. delegation is expected to visit New Delhi soon to continue trade talks, with both nations aiming to finalize a bilateral agreement by year-end
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