India-US Tariff War / India's strong reply to Trump! Up to 50% tariff will be imposed on American goods

India-US Tariff War: India has started preparing for retaliation after the US imposed heavy import duties of up to 50% on Indian steel, aluminium and related products. According to a recent report by Money Control, the Indian government is considering imposing tariffs on select US products in proportion to the losses suffered by Indian exporters. If taken, this move will be India's first formal response to President Donald Trump's tariff policy. This article analyzes the origins of this trade dispute, India's possible strategy, and its macroeconomic implications.

Start of the dispute

The trade tension began in February 2025, when the Trump administration imposed a 25% import duty on Indian steel and aluminium. It was later increased to 50%, affecting Indian exports worth about $7.6 billion. India challenged this action in the World Trade Organization (WTO), arguing that the US had imposed safeguard duty in the name of 'national security', which violates WTO rules. After the US refused to hold bilateral talks on the issue, India began legal and strategic preparations for retaliation under WTO rules.

India's counter strategy

The Indian government plans to impose retaliatory tariffs on a limited group of US goods. These goods will be selected in such a way that the revenue earned from the tariffs is equal to the loss suffered by Indian exporters. According to government sources, the move is not only to restore economic balance but also shows that India is capable of responding to unilateral moves by the US. Officials also pointed out that the US talks of a bilateral trade agreement on the one hand, but on the other hand is taking steps against Indian interests, which India will no longer tolerate.

Possible targeted US products

The US products that India may choose include the following:

Agricultural products: Such as almonds, apples, and other food items, which are imported in large quantities from the US.

Industrial goods: Such as chemicals, machinery, and automobile parts.

Technology and consumer goods: Such as electronics and luxury goods. Tariffs on these products will be carefully selected to have minimal impact on Indian consumers but send a clear message to US exporters.

Economic impact

The scale of the trade relationship between India and the US is vast. The US sells more than $45 billion worth of goods to India every year, while India's exports to the US were up to $86 billion before the recent tariffs. An escalation of the tariff war could change the balance of the trade deficit between the two countries. In February 2025, Prime Minister Narendra Modi and President Trump had set an ambitious target of increasing bilateral trade to $500 billion, but India rejected US demands in agriculture and sensitive sectors, stalling the talks.

Potential risks

• Trade deficit: The tariff war could widen India's trade deficit, as rising prices of US products could impact imports.
• Economic ties: Long-term economic ties between the two countries could be impacted, especially if the dispute deepens.
• Global supply chain: Tariffs on key commodities such as steel and aluminium can affect the global supply chain, which can also impact other countries.

India's position and future strategy

India has adopted a balanced strategy in this matter. On the one hand, it is legitimising its action under WTO rules, so that its position in the global community remains strong. On the other hand, it is trying to put pressure on the US through retaliatory tariffs. Experts believe that India will use both diplomatic and economic routes to resolve this dispute. Also, India can also focus on increasing its trade with other trading partners, such as the European Union and ASEAN countries, to reduce dependence on the US market.