US President Trump slaps 25 pc tariff plus penalty on India: What next?

US President Donald Trump imposed 25 per cent tariffs on Indian goods, citing trade deficits and India's energy ties with Russia. The decision has sparked concerns over India’s export sectors, trade policy, and geopolitical alignment. Trade expert D Ravi Kanth, columnist T K Arun, and senior journalist Sunita Kaul Zutshi joined The Federal to analyse the implications, short-term mitigation strategies, and long-term shifts in global trade dynamics.

Trump’s tariff shock and immediate impact

The new tariffs, effective August 1, target key Indian exports, including steel, aluminum, automobiles, pharmaceuticals, and textiles. Kanth called it a "slap on Indian trade policy", highlighting how the move disrupts market access for Indian goods.

Also read: 5 reasons why Trump has imposed 25 pc tariff on India

"A 25 per cent tariff on exports to the US, India’s largest market, is a severe blow. Competing with Vietnam, Bangladesh, and Cambodia in textiles will become even harder," he said. The withdrawal of Generalized System of Preferences (GSP) benefits earlier had already cost India $7 billion in trade losses.

Sectors hit hardest

Steel & Aluminum: Already facing 50% tariffs.

Automobiles & Auto Parts: 25 per cent duty threatens India’s growing export segment.

Pharmaceuticals: Generic drug exports, a major revenue source, could face additional sectoral tariffs.

Textiles: Competing with duty-free exports from Least Developed Countries (LDCs) like Bangladesh.

Zutshi noted that while the tariffs may not be final, Indian exporters face uncertainty. "If shipments arrive after August 1, they’ll bear the brunt unless negotiations change Trump’s mind — which seems unlikely," she said.

Geopolitics and trade: Russia factor

Trump linked the tariffs to India’s energy purchases from Russia, calling it a "dangerous trend" of mixing trade with security concerns.

Also read: Why Trump’s 25 pc tariff on India is not surprising at all

Kanth warned: "The US is weaponising trade to force geopolitical alignment. India cannot abandon Russia, a long-standing defense partner, just because Trump demands it."

Arun echoed this, stating: "Strategic autonomy is non-negotiable. India cannot let the US dictate its defense purchases or energy imports."

India’s trade policy missteps?

Kanth criticised India’s handling of trade negotiations, pointing to premature announcements of a "fantastic deal" with the US. "We showed our hand too early. The US doesn’t negotiate fairly — it bullies," he said.

Zutshi added that India failed to leverage its position: "We should have played the ‘generic medicines for American healthcare’ card better. Instead, we’re reacting, not strategising."

Alternate trade blocs and BRICS opportunity

With US trade relations strained, panellists suggested deepening ties with BRICS (Brazil, Russia, India, China, South Africa). Kanth said: "Trump is pushing developing nations together. India must strengthen South-South trade, especially as BRICS chair."

Arun, however, downplayed the immediate damage: "The 25 per cent tariff isn’t as bad as it seems. India’s IT services — its biggest export — remain unaffected."

Retaliation and long-term solutions

Retaliatory tariffs? Zutshi argued India should have threatened countermeasures earlier.

Diversifying markets: Africa and other emerging economies could offset US losses.

Boosting domestic manufacturing: Reducing reliance on vulnerable export sectors.

AI and the future of Indian IT

The discussion ended with concerns over India’s lag in AI adoption. Zutshi warned: "The decline of Indian IT isn’t just due to tariffs — it’s falling behind in AI."

Arun countered that Indian firms could still leverage AI tools, but energy constraints remain a hurdle.

A test for India’s trade diplomacy

The US tariffs present both a crisis and an opportunity — forcing India to rethink trade dependencies while exploring new alliances. As Kanth noted, "This is a wake-up call. We must challenge US bullying and strengthen ties with the Global South."

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