During Prime Minister Modi recent US visit, former President Donald Trump unveiled his aggressive “reciprocal tariffs” plan, targeting countries that impose high tariffs on US goods. Trump’s remarks, signaled that India may not receive any tariff concessions despite hopes of a trade deal to double bilateral trade.
“Whatever you charge, I’m charging,” Trump declared, referencing his conversation with PM Modi. “They [India] charge the highest tariffs in the world.” His comments follow India’s recent tariff cuts on US products like bourbon whiskey, which were intended to ease negotiations for greater market access.
Elon Musk, a key US government advisor and CEO of Tesla and X, also criticized India’s high tariffs, describing them as “unfair” and noting some tariffs are as high as 100%. Musk had also met with PM Modi during his US visit.
While specific details on reciprocal tariffs are expected by April, Goldman Sachs warned that India’s higher tariffs, especially on agricultural products, textiles, and pharmaceuticals, could make it vulnerable. India’s goods trade surplus with the US, now $35 billion, could be impacted under scenarios where the US matches India’s tariffs.
Goldman Sachs estimates that US-imposed tariffs could reduce India’s GDP growth by 0.1-0.3 percentage points, depending on whether reciprocity is applied at the country or product level. Should Trump extend global tariffs to all countries, India’s exposure to US demand could lead to a potential 0.1-0.6 percentage point reduction in GDP growth.
With trade negotiations in flux, experts warn that growing tensions could complicate India-US trade ties at a critical time.
