US President Donald Trump on Thursday doubled down on India, ruling out any trade negotiations until the dispute over tariffs is resolved. While the US President’s new policy could batter the Indian export sector and the GDP, observers and trade analysts are eyeing ways to cushion the impact it would have on the Indian economy, which was anticipated to emulate China.
While the first round of 25 per cent reciprocal tariffs that Trump announced for India has already come into effect, the next 25 per cent will come into play 20 days later. While India has so far shown no hints of submitting to Trump’s demand - Prime Minister Narendra Modi stating he won’t compromise on farmer’s needs - the going forward won’t be easy.
#WATCH | Responding to ANI's question, 'Just to follow up India's tariff, do you expect increased trade negotiations since you have announced the 50% tariffs?', US President Donald Trump says, "No, not until we get it resolved."
— ANI (@ANI) August 7, 2025
(Source: US Network Pool via Reuters) pic.twitter.com/exAQCiKSJd
India exports $86.5bn worth of goods to the US, including garments, pharmaceuticals, gems, and jewellery. While a small hike in 10-15 per cent itself would be a major blow to the exporters, 50 per cent would be much beyond their capacity. The trade to the US is 18 per cent of India's total global export, making up 2.2% of GDP. At present, 25% tariff could cut GDP by 0.2–0.4%.
India is working on ways to appease Trump by offering concessions and by not retaliating against the tariff. While deliberating on a potential trade deal was on, Trump’s statement ruling out talks has put officials in a dilemma.
Still, a trade deal is the only option. Soumya Kanti Ghosh, chief economic advisor of the State Bank of India Group and member of the Prime Minister’s Economic Advisory council, told Bloomberg that a favourable trade deal benefiting both countries can be secured within the next three weeks.
Then, there is the option to explore other trade opportunities in South Asia, Africa, and Latin America. Brazil’s President Luiz Inácio Lula da Silva has already rung up Narendra Modi, and the two have agreed to discuss mutual trade. This could also be taking a leaf out of China’s playbook, which saw Chinese exports to Southeast Asia and other regions surge, while those to the US fell, after a 30 per cent tariff was imposed by the US. China released the data on Thursday to show how it beat the bully, as exports climbed 7.2% in July. But, unlike India, China has a lot of leverage in the tariff war and has proved to the US by cutting off exports of rare-earth magnets used in everything from mobile phones to missiles.
Then, there is the question of abandoning ties with Russia to side with the US. "India's efforts to reduce its dependence on Russian military hardware and diversify its oil imports predate pressure from the Trump administration, so Delhi may be able to offer some conciliatory gestures in line with its existing foreign policy behaviour," Dr Chietigj Bajpaee, senior research fellow, Chatham House, told BBC News.
Some believe Trump's recent actions give India an opportunity to rethink its strategic ties, the significance of which is reconsidering ties with China, signs of which are already happening. Prime Minister is heading to Beijing for the SCO Summit, and China has cheered for India’s decision not to submit to Trump.
While New Delhi has so far not hinted at any plans to retaliate, this couldn’t be ruled out. In 2019, we did that. Then India announced tariffs on 28 US products, including US apples and almonds, in response to the US tariffs on steel and aluminium. Some of them were eventually reversed.
