Turning Trump tariffs to India’s advantage

By capitalising on supply chain shifts, India could power its world trade

With the Trump administration adamant on its hallmark protectionist policy, global trade dynamics are in a state of flux. The reimposition of steep tariffs — including a sweeping 26 per cent duty on Indian goods and a staggering 104 per cent on Chinese imports — has sparked concern and debate. Yet, Indian Commerce Minister Piyush Goyal strikes a confident tone. “We are keeping India’s interests at the forefront,” he said, affirming that a broader trade agreement with the US is in the works. The larger question, however, is whether India can actually benefit from these tariffs.

Unlike other nations who have responded with retaliatory tariffs, India has chosen a path of strategic restraint. This isn’t a sign of weakness but a calculated move. With bilateral negotiations underway, New Delhi is focused on the long game — securing a comprehensive and mutually beneficial trade pact that could anchor its ambition for a “Viksit Bharat” (Developed India) by 2047. What makes this moment particularly ripe for India is the geopolitical shift in Washington’s posture towards China. With US–China tensions escalating, and Beijing bearing the brunt of some of the highest tariffs, global companies are urgently seeking alternative supply chains. The 104 per cent tariff on Chinese imports essentially prices China out of certain US markets — a gap India is uniquely positioned to fill.

This is where India can step in — not just as a replacement, but as a viable, dependable, and democratic alternative. With its large labour force, improving infrastructure, and digital readiness, India can attract US firms looking to diversify away from China. On the other hand sectors like pharmaceuticals, electronics, auto components, and textiles — all heavily hit by Chinese tariffs on the US in a retaliatory move, are sectors where India could seize market share.

India and the US have already laid the groundwork for an ambitious economic partnership. “Mission 500,” a joint effort to double bilateral trade to $500 billion by 2030, is more than a talking point — it’s a structured roadmap with defined milestones. The first phase of the Bilateral Trade Agreement is expected to be finalised by autumn 2025, a crucial development that could lock in long-term trade stability and preferential terms for Indian exporters. Meanwhile, India’s energy diversification reflects its broader strategic posture: reduce dependencies, expand options, and strengthen internal capacity. By sourcing oil from over 40 countries and boosting domestic exploration, India is not only preparing for trade shocks but also asserting economic resilience.

Let us be clear on one thing: Trump tariffs are here to stay and going to hit hard. They will lead to losses for Indian companies, as their goods for the US market would be costly, squeezing their margins. An estimated seven billion loss is on the cards and we have to acknowledge it. We cannot be in a state of denial.  But it is also true that India’s exposure to the US market is rather low compared to countries like China or Vietnam, and so we will still have elbow room and opportunity to shift our exports to other markets. The tariffs will cause some short-term pain. Indian exporters — especially in labour-intensive sectors like apparel and leather — may struggle with the added costs. But the larger shift in global supply chains offers India a rare window. If it can position itself as a cost-effective and reliable manufacturing hub, the long-term gains could outweigh the temporary losses.

Additionally, the success of India’s response will depend on how quickly it can improve ease of doing business, cut red tape, and deliver infrastructure upgrades that global investors demand. The world is watching — and so are multinational corporations looking to hedge against an uncertain China. Trump’s tariff shockwave has rattled global markets, but India may just find itself in an enviable position.