New Delhi [India]: A potential India-US trade deal may help mitigate the effects of tariffs imposed under former US President Donald Trump, according to a report by Nirmal Bang Equities.
The report noted that while Trump’s tariff policies have impacted global trade, India is actively working to address the resulting challenges.
“India not immune to tariffs but will work around it… A potential India-US trade deal may eventually iron out some of the issues around tariffs and market access on both sides,” the report stated.
It highlighted concerns that Trump’s administration had announced possible reciprocal tariffs on Indian exports, with an official decision expected on April 2. While the US has already imposed a 25% tariff on steel and aluminum imports, these metals account for less than 2% of India’s exports to the US, limiting the immediate impact.
However, there are concerns that other significant Indian exports — including electronics like smartphones, automobiles, gems and jewelry, textiles, chemicals, and seafood — could face tariffs.
The report pointed out that pharmaceutical exports are unlikely to be severely affected, as they are considered essential by the US government.
In a worst-case scenario, up to 30% of India’s merchandise exports to the US, valued at approximately USD 25 billion, could be impacted, the report warned.
The agricultural sector is one of the key areas where trade imbalances exist between the two nations, with tariff differentials being the highest for agricultural products. However, since agriculture makes up a small portion of India’s exports to the US, the potential impact on this sector may be limited.
To address these challenges, India has introduced measures in the 2025 Union Budget aimed at reducing trade tensions. Steps such as lowering tariffs on motorcycles and alcoholic beverages demonstrate India’s efforts to foster better trade ties. Additionally, India’s commitment to defense purchases from the US and exploring oil imports are part of its broader strategy to strengthen bilateral trade relations.
Looking forward, a potential trade deal between India and the US could help resolve tariff concerns and improve market access for both nations. In the meantime, India is focusing on minimizing trade disruptions and ensuring its exports remain competitive amid evolving global trade dynamics.