Following US President Donald Trump's announcement of a 25 per cent tariff on Indian imports, the Indian government has indicated that it will not retaliate with reciprocal tariffs. According to sources cited by national media, the government's strategy is to address the issue through diplomatic negotiations to find a solution that benefits both countries.
On Wednesday, President Trump declared the new 25 per cent tariff on Indian imports, which is set to take effect on August 1. He also hinted at additional 'penalties' on India, citing the country's continued oil imports from Russia and what he referred to as 'strenuous and obnoxious' non-monetary trade barriers. In a post on Truth Social, Trump criticised India's high tariffs on US goods and stated that trade relations between the two countries have been limited despite their friendship. He further derided both India and Russia as 'dead economies,' declaring he 'does not care' what India does with Russia.
A government source, however, stated that India's response would be non-retaliatory, choosing "silence" as the best answer and opting to resolve the matter at the "negotiation table." While some experts expressed concern that the US move could negatively impact key sectors of the Indian economy, government sources appeared unfazed. They drew a parallel to India's past experience with sanctions, such as those imposed after the Pokhran-II nuclear tests in 1998, emphasising that India is now a "self-sufficient economic power" and has no reason to worry.
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The government's official position was articulated by Union Commerce Minister Piyush Goyal in Parliament on Thursday. He stated that the government is actively examining the implications of the US's move and is consulting with various stakeholders, including exporters and industry representatives. Goyal added that the government is committed to taking all necessary steps to safeguard India's national interests, with a particular focus on the welfare of farmers, workers, entrepreneurs, and MSMEs.
The US tariffs also sparked a domestic political debate in India. Opposition parties, particularly the Congress, were quick to attack the Modi government. Rahul Gandhi, the Leader of the Opposition in the Lok Sabha, publicly agreed with Trump's "dead economy" remark. He blamed the government's policies, such as demonetisation and a "flawed" GST, for the country's economic situation and claimed that the entire world was aware that the Indian economy was "dead."
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