Turn Tariff Threats Into Opportunities

A BTA, with India lowering its tariffs to US levels, will open up the Indian market for American producers, and lower prices faced by our consumers

- PRADEEP S MEHTA SUDIP K PAUL The authors work for CUTS International, a global public policy research and advocacy group

IN THE EVOLVING landscape of global trade, President Donald Trump's return to the White House brings renewed focus on the "America First" trade policy. Fortuitously, his threats present opportunities for India's economic aspirations.

In his first term, Trump's tariffs on Chinese exports to America proved to be a double-edged sword. While aimed at reducing America's trade deficit and creating jobs there, those measures drove inflation, slowed GDP growth, increased business uncertainty, and reduced productivity and investment. China, on the other hand, deftly circumvented them by relocating its assembly operations to Southeast Asia while retaliating with targeted tariffs on American goods.

Now, as Trump signals an expansion of this approach to include America's key trading partners such as Canada, Mexico, and India, many have warned about potential destabilization of the global trade system. The resulting business uncertainty could reduce foreign direct investment flows and productivity worldwide, potentially pushing the US towards recession.

Yet, within this brewing trade storm lies significant opportunities for India. Rather than engaging in a destructive tariff war, India and the US are keen on signing a Bilateral Trade Agreement (BTA). According to the India-US joint statement last month, signed by President Trump and India's Prime Minister Narendra Modi, its negotiation is expected to be completed by autumn/fall of 2025.