India remains resilient despite U.S. retaliatory tariffs, leveraging its first-mover advantage through bilateral trade negotiations. With strategic measures to counter challenges, India strengthens its global trade position amidst shifting U.S. tariff policies and increased global alliances.

FREMONT, CA: Despite the United States' decision to impose a 26 percent retaliatory tariff, India is expected to maintain a ‘first mover advantage’ as bilateral discussions for a trade agreement with the U.S. are already underway. India is in a relatively stronger position than competing nations or regional rivals such as Indonesia and Vietnam, which are facing higher reciprocal tariffs.

On April 2, the United States. President Donald Trump signed an executive order introducing a new structure of reciprocal tariffs, applying additional ad valorem duties ranging from 10 percent to 50 percent on imports from various countries. The baseline 10 percent duty came into effect on Saturday, with additional country-specific tariffs scheduled to be implemented from April 9.

According to a White House Fact Sheet, the United States may reduce tariffs if its trading partners undertake “significant steps to remedy non-reciprocal trade arrangements” and align with its economic and national security interests.

India and the United States are engaged in intensive discussions to finalize a proposed bilateral trade agreement (BTA) by the fall of 2025. The envisioned agreement seeks to be fair, balanced, and mutually beneficial. Both parties are exploring all available negotiating options, with the scope of the BTA expected to encompass both goods and services.

The immediate effect of reciprocal tariffs may initially dampen demand from the United States; however, according to a government source, demand is expected to recover over time as the United States administration prepares for income tax reductions and petroleum prices continue to decline.

Amid concerns that sectors such as carpets and marine products have been adversely affected by the reciprocal tariffs, the Department of Commerce is actively engaging with exporters to assess the potential impact. The government has also expressed willingness to extend support should exporters seek assistance.

India is closely monitoring inbound shipments in light of the heightened risk of product dumping following the announcement of reciprocal tariffs. This development has raised concerns over increased inflows of Chinese goods into the Indian market, particularly as the United States has raised its tariff on Chinese imports to 54 percent—comprising an additional 34 percent tariff on top of an existing 20 percent. The source noted that India is prepared to undertake measures in compliance with World Trade Organization (WTO) norms, if necessary.

Further, the United States' plan to implement reciprocal tariffs on most countries has prompted several key trade partners to approach India for free trade agreements (FTAs). In addition to the United States, India is currently engaged in trade negotiations with the United Kingdom (UK), the European Union (EU), New Zealand, Peru, Chile, and Oman. Discussions around potential trade agreements with Bahrain, Qatar, or the Gulf Cooperation Council (GCC) may soon materialize.