Engaged with Trump administration, expect no tariff threat: Indian officials

Engaged with Trump administration, expect no tariff threat: Indian officials

Engaged with Trump administration, expect no tariff threat: Indian officials ByRajeev Jayaswal, Rezaul H Laskar, New Delhi Feb 03, 2025 05:12 AM IST Share Via Copy Link The Trump administration's tariffs on imports are unlikely to impact India directly, as both nations aim for a stronger, mutually beneficial relationship.

The Trump administration’s decision to impose higher tariffs on imports from Mexico, Canada and China is unlikely to have any immediate direct impact on India’s external economy, and as India and America are closely engaged to resolve differences through dialogue, no direct future threat is expected, people aware of the development said.

Prime Minister Narendra Modi and US President Donald Trump. (AP File Photo)

As far as Mexico and Canada are concerned, the Trump administration’s measures are more because of an influx of illegal migrants from across the border as was the case with Colombia that was resolved after the Colombian government agreed to take back illegal immigrants, the people said requesting anonymity.

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The difference between the US and China is quite complex and real trade issues are involved. Besides the US has accused China of indulging in currency manipulations and technological espionage, one of them said.

While India deals with any issues raised by its partners on priority and accords special strategic importance to the US, Washington hasn’t raised any specific and substantial trade issues, the person cited above said.

“Washington has issued warnings to BRICS countries where India is also a member along with Brazil, Russia, China and South Africa. But India is not part of any such move,” he said. “The India-US relationship is based on mutual trust,” he said, adding that New Delhi is not contemplating any moves to upset Washington.

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Since Trump’s return for a second term, India has signalled its willingness to work with the US administration to address all issues related to trade and illegal immigration, and both sides are keen to forge a “bolder, bigger and more ambitious” relationship, a second person said.

Trump has spoken of imposing “100% tariffs” on the Brics bloc, which includes India, a move that triggered worries about the potential fallout on New Delhi. However, the fundamentals of the bilateral relationship remain strong, he said, adding that trade in goods and services soared to $190 billion in 2023. During his phone call with Trump on January 27, Prime Minister Narendra Modi spoke about working together for global peace and security, and discussed measures to advance cooperation in trade, technology and defence. Modi said the Indian side is committed to a “mutually beneficial and trusted partnership”.

A readout from the White House said Trump had “emphasised the importance of India increasing its procurement of American-made security equipment and moving toward a fair bilateral trading relationship”.

Given this scenario, at this moment, there is absolutely no threat of any tariff measures by US. “We will cross the river when it comes,” a third person said. He said the recent tweaks in customs duty is not triggered by any threat of possible US action “because there is no cause for such an action”. “A decision to streamline and rationalise customs duty structure have been taken in previous two budgets and the move in this budget should be seen in continuation to that,” he added.

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The second person said, customs duty tweaks were not done to signal either the US or any other global trade partners. “India is in favour of equitable trade relationship with them and it is not adopting protectionist measures other than supporting its poor farmers with handkerchief-sized farm land, milkmen having one-two cows or buffaloes, and small industries run for subsistence. India is still not a developed nation and the government can’t shrug off its responsibility to protect poor and vulnerables,” he said.

He said the budget itself has reduced several customs duty slabs making it simpler and reduced import duties for industrial goods. While some of them are meant for inputs for local manufacturing, there are several like motorbikes etc where duties have been reduced. “Economic and line ministries are keeping close watch of external developments impacted by the US action and they are ready to take measures to protect Indian interests, if required,” he added.