A Roundup of Industry Reactions
As an entrepreneur and someone who has also been actively involved in exports to the USA from India for several decades, and more recently in manufacturing too, I have seen first-hand how trade policies shape businesses. US President Donald Trump recently announced sweeping tariff changes that has left many in the global business community, including myself, extremely concerned.
In the past, I have always approached policy changes with resilience, however, President Trump’s move has certainly introduced a new layer of complexity for all exporters. With margins under pressure, rising costs, and established trade relationships being re-evaluated, the outlook appears decidedly unfavourable.
Rather than offer my personal opinion though, I am going to discuss different views and analysis from economists, industry leaders, and experts to help in better understanding the implications of this.
Tariffs, trade, and some tremors
US President Donald J. Trump revealed tariff measures under a new reciprocal trade framework in early April 2025. All imports into the United States will be subject to a baseline 10 percent tariff (this will be in place even during the 90 day pause), with significantly higher rates targeted at some countries that maintain large trade surpluses with the US. India is one of the US’s largest trading partners and is also among the countries most impacted.
While India also has a trade surplus with USA, it is much lower compared to countries like China. Better access to Indian markets and ease of doing business here has always been a major concern for American Governments even prior to the current dispensation. “Atmanirbhar Bharath” and “Make in India”, while good for Indian Industries, has always been a bone of contention for our trade partners like USA. I had recently also written about The Future of India-U.S. Trade relations, do check it out.
Why are tariffs being imposed?
US administration has named long-standing trade imbalances, non-trade barriers and currency manipulation by many countries, as the reason for this. President Trump even went on to declare April 2nd as “Liberation Day.” He said that the new measures aim to protect American jobs and industries. The authority for the imposition of these tariffs is under the IEEPA (International Emergency Economic Powers Act). It lets the President respond to national emergencies with economic actions, and that is what Trump is doing. The other major aim is to bring manufacturing back to the US.
So, what are the experts saying?
Global economists and trade experts have been swift in responding to Trump and there are mostly critical. Some of the first responses are:
- Tariffs are now likely to increase the costs for US importers as they may pass on the burden to the American consumers. It will then be an indirect tax.
- Experts also expect inflationary pressures to rise and this will have a huge impact on consumer sentiment.
- Investor confidence could dip due to policy unpredictability in this current political scenario. This could potentially lead to a slowdown in capital inflows as well. We can see this in how the markets have already reacted.
- Global trade could experience further disintegration, especially in sectors already recovering from pandemic-induced disruptions.
- Stagnation and Inflation could lead to what economists’ call “Stagflation”
For Indian exporters who have long relied on access to the US market, the uncertainty surrounding these tariffs and the evolving nature of bilateral trade relationships could lead to significant disruptions. The worry is not merely about higher duties, but it is also about access, predictability, and the long-term impact it will end up having on established relationships. There will be volatility and caution in trade planning.
Tariffs raise costs for companies and consumers that rely on imports. They’re also likely to provoke retaliation.
China has already responded to Trump’s trade war by slapping tariffs on American goods. Likewise, The European Union has also punched back against Trump’s tariffs. Canada too has responded negatively.
Worse, the retaliatory taxes imposed by China and the open fight from US has been ongoing and the world is watching!
The Indian Perspective
For Indian exporters, particularly in sectors like textiles, automotive components, and precision engineering – areas where cost competitiveness and lean margins define success – the proposed tariffs could be a decisive blow. For example, India’s exports to the US in the machinery and electronics segments have grown steadily over the years. A sudden tariff hike might make Indian products uncompetitive compared to countries with preferential or unchanged duty structures.
India has found itself under particular scrutiny, with the US citing India’s average MFN tariff of 17 percent – the highest among major economies – as justification for higher reciprocal tariffs. The impact spans several sectors including gems, jewellery, textiles, agriculture, automobile components, which make up over a quarter of India’s exports to the US, processed food, electronics, and machinery.
However, the pharmaceutical sector has been exempted from these new levies for now.
India’s Next Steps
The Indian government has taken a measured approach, with the Ministry of Commerce and Industry reportedly assessing various models to mitigate tariff impact. Media reports indicate:
- Plans to launch a digital platform to track export restrictions and help exporters to voice concerns.
- Ongoing discussions to negotiate a broader bilateral trade and investment agreement with the US.
- Sectoral incentives being considered to attract US investment in semiconductors, clean energy, and aerospace.
Are There Any Silver Linings?
There is some respite as Trump announced a 90 day pause on reciprocal tariffs, while maintaining the baseline of 10%. India wants to move quickly on a bilateral trade deal with the United States, according to government officials.
Some analysts believe that while the immediate effects may be disruptive, India’s growing position as a manufacturing alternative to China with initiatives like “Make in India,” could potentially open new trade doors. Also, India’s strong domestic demand could help buffer external shocks. Morgan Stanley, meanwhile, cautions that trade uncertainty may weigh more heavily than direct restrictions.
This may also present an opportunity for India to undertake reforms in its tariff structures, which have steadily increased over the years. Additionally, it could consider easing existing restrictions to create a more conducive environment for global businesses to invest and operate in India
Conclusion
The coming weeks and months will be critical in understanding how global trade recalibrates in light of these new US tariffs. While challenges are evident, this could also be a moment of recalibration for many economies, including India, to reassess their global supply chain strategies and trade dependencies. Investment in manufacturing requires both time and sustained commitment; uncertainty is inherently detrimental to business, as investors and enterprises alike prioritize stable environments and predictable policy frameworks. Most companies have now adopted a ‘wait and watch’ approach, refraining from making significant investments, purchases, or increasing their inventory levels. As always, it is the shared resilience and agility of the global business community that will determine how effectively we navigate the uncertainties ahead. Interesting times ahead for sure.
