In a landmark address to a joint session of Congress, US President Donald Trump took a firm stance on trade, emphasizing his administration’s commitment to enforcing reciprocal tariffs on foreign imports. Among the countries he singled out was India, alongside China and the European Union, highlighting growing trade tensions between the United States and its global partners. Trump underscored the principle of “fair trade,” arguing that India and other nations have long imposed excessive tariffs on American goods, particularly automobiles, to the detriment of US businesses.

Speaking before a packed House of Representatives, Trump expressed strong dissatisfaction with what he described as unfair trade practices and called for swift corrective measures. “Other countries have used tariffs against us for decades, and now it’s our turn to start using them against those other countries,” he asserted, reinforcing his “America First” approach. Pointing to India’s high tariff rates, he stated, “India charges us tariffs, 100 percent. The system is not fair to the US; it never was.”

Trump also made a significant policy announcement: the implementation of reciprocal tariffs would commence on April 2, aiming to create a level playing field for American exporters. Under this initiative, the US plans to impose equivalent tariffs on nations that levy high duties on American goods. “Whatever they tariff us, we will tariff them. Whatever they tax us, we will tax them. If they use non-monetary barriers to keep us out of their market, we will do the same,” he declared.

While specific details remain unclear, experts predict that India could be disproportionately affected due to its relatively high tariffs on several categories of US imports. One of the most notable disparities Trump referenced was India’s 100 percent tariff on imported American automobiles, a longstanding issue between the two countries.

The prospect of reciprocal tariffs raises concerns about potential disruptions in India-US trade relations, which have strengthened significantly over the past decade. While India’s tariff policies align with its protective economic strategy, they remain considerably higher than those of the US, particularly in key sectors such as agriculture, textiles, and pharmaceuticals.

A recent Goldman Sachs report outlined three potential levels at which India could be impacted: country-wide tariffs, product-specific tariffs, or non-tariff barriers. The report suggested that applying tariffs across the board would be the most straightforward approach for the US, though the economic impact would depend on the scope of implementation.

At the product level, matching India’s tariffs on specific imports from the US could add complexity. Goldman Sachs estimated that such measures could widen the average tariff differential by approximately 11.5 percentage points, requiring a longer timeline to execute. While the auto sector has been a focal point, other industries such as agriculture and electronics could also face higher duties, further straining trade ties.

Non-tariff barriers, including administrative restrictions, import licenses, and export subsidies, would be the most complex approach, according to the report. These measures could lead to even higher tariffs or restrictions, making compliance and enforcement significantly more challenging.

India’s growing trade surplus with the US is also at risk as Trump’s administration adopts more aggressive trade policies. Over the past decade, India’s goods trade surplus with the US has doubled to $35 billion, representing nearly 1 percent of India’s GDP for the fiscal year ending in 2024. This surplus has been driven largely by strong Indian exports in electronics, pharmaceuticals, and textiles—sectors that could be particularly vulnerable to reciprocal tariffs.

Despite these concerns, Goldman Sachs noted that India’s gross exports to the US, at around 2 percent of GDP, remain relatively modest compared to other emerging markets. The report estimated that increased US tariffs could reduce India’s GDP growth by 0.1 to 0.3 percentage points, depending on the extent of tariff reciprocity and US demand elasticity for Indian goods.

However, if the Trump administration were to impose broader global tariffs—something it has previously threatened—the stakes would rise significantly. In such a scenario, India’s exposure to US final demand, including goods routed through third countries, could double to 4 percent of its GDP. The potential domestic growth impact in this case could range from 0.1 to 0.6 percentage points.

As the April 2 deadline approaches, the global trade community will be watching closely to see how Trump’s reciprocal tariff measures unfold and whether they trigger wider disruptions in international markets. For India, the challenge lies in balancing the need to protect its domestic industries while preventing a full-scale trade conflict with the world’s largest economy.