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India seeks amicable solution amid US tariff threats and global trade war fears

06 Mar 2025 Evaluate

With US President Donald Trump's threat of reciprocal tariff stoking fears of a global trade war, India is looking at finding an amicable solution to the challenge under the broader framework of a trade deal with Washington. In his latest salvo, the US president mentioned India alongside the European Union, China and Canada for charging higher tariffs on American products. In line with his 'America First' policy, Trump announced during the speech reciprocal tariffs from April 2 on numerous trading partners and nations that impose higher levies on imports from the United States.

He said other countries have used tariffs against the US for decades and now, it is 'our turn' to start using them against those nations. He added ‘On average, the European Union, China, Brazil, India, Mexico and Canada -- have you heard of them? And countless other nations charge us tremendously higher tariffs than we charge them’. He also said ‘It is very unfair. India charges us auto tariffs higher than 100 per cent. China's average tariff on our products is twice what we charge them. And South Korea's average tariff is four times higher’. 

Prime Minister Narendra Modi and Trump during their February 13 talks in Washington DC agreed to negotiate a mega trade deal by the end of this year and set an ambitious target of $500 billion in annual trade by 2030 to narrow the trade deficit. A joint statement on the Modi-Trump talks said ‘Recognising that this level of ambition would require new, fair-trade terms, the leaders announced plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement by fall of 2025’.

To advance this innovative, wide-ranging BTA, the US and India will take an integrated approach to strengthen and deepen the bilateral trade across the goods and services sector, and work towards increasing market access, reducing tariff and non-tariff barriers, and deepening supply-chain integration. Both sides made firm commitment to boost the overall trade and India hopes that a mutually beneficial outcome will emerge on the issue of tariffs.

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