India-US Tariff War: 5 Powerful Impacts & Positive Response Unveiled
Recently, the India-US Tariff War has caused significant turbulence in the economies of both nations. This article examines how these tariffs are impacting five major sectors and the Positive measures India has undertaken to address this Tariff War.
- First Impact on Indian Economy – Decline in Export Industries
The Modi government has been focusing on export promotion strategies, but due to the India-US Tariff War, key urban export sectors have been directly hit:
- Textiles, gems & jewellery, and auto components are now facing up to 50% tax (reuters.com).
- The India-US Tariff War is adversely affecting nearly $86 billion worth of India’s annual exports, potentially reducing GDP growth by up to 60 basis points (reuters.com).
- Current Economic Strengths – Government Financial Support & Inflation Control
- India’s retail inflation dropped to 1.55% in July 2025, the lowest since 2017 (reuters.com).
- In this scenario, the RBI has kept interest rates stable and is considering further cuts to support the economy. Given the economic pressure from the India-US Tariff War, this is a particularly Positive move.
- Strategic Response – Defense Deals & Geopolitical Re-assessment
- India has paused certain US defense procurement plans, such as the Boeing P-8I and other security deals (reuters.com).
- This is seen as a Positive strategic response to the India-US Tariff War, sending a clear message that trade pressure can influence security cooperation.
- Domestic Movement & Shift in Consumer Preferences
- In reaction to the India-US Tariff War, calls to boycott American brands—such as McDonald’s, Coca-Cola, Amazon, and Apple—are gaining momentum in India (reuters.com).
- This has strengthened the “Make in India” and “Atmanirbhar Bharat” (Self-reliant India) initiatives—a Positive shift for local industries.
- India’s Three-Tier Strategy & Trade Negotiations
The Indian government has developed a three-tier strategy to counter the India-US Tariff War:
- Launching a dedicated Export Promotion Mission to provide exporters with financial support and credit guarantees.
- Intensifying efforts to finalize a bilateral trade agreement with the US.
- Maintaining “non-negotiable” positions on agriculture and dairy while improving market access in other sectors (timesofindia.indiatimes.com, en.wikipedia.org).
At the same time, India is keeping diplomatic channels open for constructive dialogue despite the tense trade environment (timesofindia.indiatimes.com).
Conclusion
The India-US Tariff War has undeniably posed challenges to India’s export industries and economic growth. However, inflation control, domestic self-reliance, strategic responses, and government incentives have emerged as Positive countermeasures. If India’s national strategy succeeds, this conflict could transform into an opportunity.
Frequently Asked Questions (FAQs)
- What is the main reason behind the India-US Tariff War?
– The tariffs were imposed as “secondary tariffs” in response to India’s continued purchase of Russian oil (politico.com, en.wikipedia.org). - How much impact could these tariffs have on India’s GDP?
– GDP growth could decline by up to 60 basis points (reuters.com). - How has India responded?
– Paused defense deals, boosted domestic brand promotion, sped up trade negotiations, and planned financial aid for exporters. - Which sectors are most affected?
– Textiles, gems & jewellery, and auto parts are most affected, while pharma and smartphone exports have been exempt (reuters.com). - Are the tariffs currently in effect?
– Yes, a total of 50% tariffs are in place (two rounds—25% in the first and an additional 25% in the second phase), with the second becoming effective in late August (politico.com, reuters.com).
5 External References (for further reading/citation)
- Politico – US hikes tariffs to 50% citing Russian oil purchases (politico.com)
- Reuters – India’s economy tested amid Trump standoff (reuters.com)
- Reuters – Sectors at risk; pharma, phones exempt (reuters.com)
- Reuters – India retail inflation drops to 1.55% (reuters.com)
- Times of India – Three-pronged strategy for exporters (timesofindia.indiatimes.com)
5 Breaking-News- Headlines
- Tariff War Shakes Indian Exports
- GDP Growth Takes Tariff Hit
- India Freezes US Defense Deals
- Domestic Brands Boost Amid Tariffs
- India Rolls Out Export Relief Plan
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