Govt weighs steps to ease US tariff blow

The strategy aims to boost exports, divert trade, and create domestic demand

- Rajeev Jayaswal

The government is exploring a slew of short-term and long-term measures to help Indian industry tide over the fallout of the 50% tariffs on goods sent to the US—one of the few countries with which India runs up a massive trade surplus, people aware of discussions said.

The strategy includes steps to promote exports, divert trade, and create domestic demand by substituting items that are imported, these people added, describing the decision-making following recent engagements between the government and producers and exporters.

The steps come even as officials in New Delhi maintained regular technical engagement with counterparts in Washington.

The turbulence in the ties, however, is largely political: Trump has hit out at India, first slamming it for having levies that are “among the highest in the world” and announcing a 25% rate on Indian exports on July 31. Then, on August 7, he issued an executive order slapping another 25%, citing India’s purchase of Russian oil that, Washington has claimed, helps fund the war in Ukraine.

“As sovereigns, India and the US can have a mutually beneficial trade deal. But President Donald Trump's unilateral decisions to impose punitive tariffs when talks are ongoing are unwarranted and counterproductive,” one person said, adding that both sides remain engaged to find amicable solutions.

This echoes India’s stated position. Ministry of external affairs spokesperson Randhir Jaiswal called the tariffs “unfair, unjustified and unreasonable” on Thursday while vowing that India would “take all necessary measures to safeguard its national interests and economic security.”

Bilateral trade negotiations between India and the US are progressing well “as on date” but nothing is certain given the unpredictable nature of the US leadership, the person quoted above added.