India Evaluating Impact of US-Imposed Reciprocal Tariffs Amid Rising Trade Tensions; MoS Finance Pankaj Chaudhary Reaffirms ‘India First’ Approach Under PM Modi

In light of recent trade developments, Minister of State for Finance Pankaj Chaudhary announced on Thursday that the Indian government is actively engaged in a thorough evaluation and assessment of the new reciprocal tariffs imposed by the United States on Indian exports. The tariffs, reportedly reaching as high as 26 percent, are part of a broader economic policy initiative by the US administration under former President Donald Trump, who continues to influence American trade discourse with his longstanding “America First” doctrine.

Speaking to the media on the sidelines of an event organized by the Pension Fund Regulatory and Development Authority (PFRDA), Chaudhary clarified that the Government of India is closely monitoring the situation and conducting an in-depth analysis to gauge the direct and indirect consequences of the newly introduced duties on Indian products.

“For Donald Trump, it’s ‘America First,’ but under Prime Minister Narendra Modi, it is and will always be ‘India First.’ We are carefully assessing the implications of the reciprocal tariffs imposed by the United States,” Chaudhary said, emphasizing that any strategic response from India will be guided by national interest and the overarching objective of safeguarding India’s economic and trade priorities.

The Nature of the US Tariff Hike: A Reciprocation of Duties

The new tariff structure introduced by the United States targets goods from about 60 countries, including India, and is being justified on the grounds of trade reciprocity. The American administration argues that several countries, including India, impose disproportionately high import duties on US-made products. As a corrective measure and to protect American manufacturers and workers, the US has decided to mirror or exceed those duty rates through retaliatory levies on imports from such nations.

India, in particular, has been cited for maintaining elevated tariffs on a variety of imported goods, including agricultural produce, motorcycles, electronics, and medical devices, prompting repeated complaints from Washington over the years.

According to sources familiar with the development, the 26% tariff will affect a range of Indian exports, many of which are critical to bilateral trade, including textiles, engineering goods, pharmaceuticals, and auto components. The move is part of a strategic effort by the US to address its long-standing trade imbalance, reduce its fiscal deficit, and incentivize domestic production and job creation.

Impact on India’s Export Economy and Global Trade Standing

Experts in international trade policy and economics have expressed mixed reactions to the development. While some fear that the additional duties could lead to a decline in export competitiveness for Indian goods in the American market, others argue that India remains in a relatively stronger position than many of its peers.

Several competing nations also face similar or even higher tariffs from the US, which may mitigate the relative disadvantage for Indian exporters. Additionally, India’s diversified export portfolio, combined with efforts to expand into emerging markets, may help buffer the blow.

Economists believe that India could leverage this situation to recalibrate its trade partnerships, seek bilateral or multilateral renegotiations, and even explore the possibility of complaining to the World Trade Organization (WTO) if the tariffs are found to violate global trade norms.

Government Response and Strategic Positioning

In his remarks, MoS Pankaj Chaudhary reassured stakeholders that the government is not only conducting an economic assessment but is also exploring policy countermeasures to ensure minimal disruption to India’s exports and foreign trade earnings. The government’s priority, he said, remains to protect the interests of Indian businesses and exporters, while also maintaining strong diplomatic and economic relations with the United States.

“We are committed to safeguarding the interests of our producers, exporters, and trade community. India will not hesitate to respond appropriately if the situation demands it, but we will do so keeping in mind our long-term national interest,” he added.

In line with the government’s ‘Atmanirbhar Bharat’ (Self-Reliant India) campaign and its strategy to become a global manufacturing hub, Indian officials see this as an opportunity to accelerate internal reforms, enhance supply chain resilience, and reduce overdependence on a few large export destinations.

Broader Implications for India-US Trade Relations

The imposition of reciprocal tariffs by the United States is seen by some as a sign of widening friction in the trade relationship between the two nations, which have otherwise enjoyed deepening strategic ties across sectors including defense, technology, and energy.

While India and the US have often collaborated on trade and investment initiatives through platforms like the US-India Trade Policy Forum, the issue of tariff barriers and market access disputes has remained a recurring flashpoint.

Trade experts suggest that diplomatic engagement and back-channel negotiations may be the best way forward to prevent further deterioration in trade ties, especially in light of the geopolitical complexities in the Indo-Pacific, where both nations share mutual strategic interests.

As the Indian government continues to examine the short-term economic consequences and long-term strategic implications of the US tariffs, industry leaders are expected to convey their concerns and input to the Ministry of Commerce and Industry. The Ministry of Finance and the Department of Revenue will also play a key role in shaping India’s policy response.

In the meantime, businesses reliant on exports to the US are being advised to explore alternative markets, optimize cost structures, and stay informed about evolving trade policies through regular government updates.

While the US’s latest tariff hike presents a serious challenge, it is also a potential inflection point for India’s global trade strategy. With a firm commitment to the ‘India First’ doctrine under Prime Minister Modi’s leadership, the country is expected to navigate this challenge with resilience, diplomacy, and foresight.