In a strategic move to ease trade tensions with the US, India has reduced tariffs on several American imports, including Harley-Davidson motorcycles, Tesla vehicles, and other US goods, as part of the Union Budget 2024. The tariff cuts aim to improve market access for American exporters and signal India’s commitment to fostering stronger trade ties.
However, despite these concessions, analysts warn that US President Donald Trump, known for his aggressive trade policies, may still impose fresh tariffs on key Indian exports, maintaining his broader protectionist stance.
Even with these reductions, experts believe that India’s trade surplus with the US—estimated at $35-36 billion—could still make it a target for Trump’s economic policies. Washington may impose levies on critical Indian exports such as:
Steel and Aluminum: A sector already impacted by previous US tariffs.
Pharmaceuticals: A vital industry, though Trump may hesitate due to domestic demand.
Textiles and Apparel: A labor-intensive sector that heavily depends on US markets.
Jewelry, Electrical Appliances, and Handicrafts: High-value exports that could face scrutiny.
Ram Singh, an expert from the Indian Institute of Foreign Trade (IIFT), stated, “Trump will likely impose tariffs on sectors that inflict more pain on India, such as jewellery, electrical appliances, machinery, textiles, apparel, and labour-intensive goods such as handicrafts, leather, and carpets. He will likely avoid targeting pharmaceuticals, mineral fuels and marine products to minimise the impact on US consumers.”
Indian Prime Minister Narendra Modi is scheduled to visit the US for two days starting February 12, where he is expected to hold talks with US President Donald Trump. The agenda will likely include trade and defense discussions, especially against the backdrop of potential new US tariffs on Indian exports.
While it is unclear whether Trump will impose fresh tariffs before Modi’s visit, officials indicate that the discussions will focus on resolving trade tensions and exploring new areas of bilateral commerce.
Trade policy expert Biswajit Dhar emphasized, “Trump has yet to specify which Indian sectors he will target, but past actions indicate a broad-brush approach.”
To counterbalance potential tariffs, India could ramp up its energy and defense purchases from the US, potentially reducing trade imbalances and gaining strategic trade leverage. Increasing imports of American oil, liquefied natural gas (LNG), and defense equipment could strengthen diplomatic and economic ties.
Despite India’s preemptive tariff cuts, Trump has continued to advocate for his “America First” trade policy. Recently, he announced plans to impose tariffs on foreign-made semiconductors, pharmaceuticals, and computer chips, reinforcing his protectionist stance.
“China is a tremendous tariff maker, and India and Brazil and so many other countries. So we’re not going to let that happen any longer because we’re going to put America first,” Trump declared in a recent statement.
One of the key concessions India made was reducing tariffs on large-engine motorcycles—an issue Trump had repeatedly criticized, particularly concerning Harley-Davidson exports:
Motorcycles below 1,600cc: Duties reduced from 50% to 40%.
Motorcycles above 1,600cc: Duties slashed from 50% to 30%.
Total US motorcycle exports to India (2023-24): Valued at $3 million.
Other notable tariff reductions include:
US Waste and Scrap Materials: Duties cut from 5% to 0% (valued at $2.5 billion).
Carrier-Grade Ethernet Switches: Tariffs halved from 20% to 10%.
The upcoming bilateral meetings will test India’s ability to navigate Trump’s protectionist trade policies while maintaining strong trade relations. Modi’s key challenge will be to ensure that India is not caught in the crossfire of US election-driven trade measures.
The effectiveness of India’s preemptive tariff cuts in preventing fresh US tariffs remains uncertain. However, strategic trade negotiations and expanded defense and energy cooperation could play a crucial role in mitigating potential trade conflicts.