India poised to surpass export recorddespite 50% tariff imposed by Donald Trump, asserts Minister Piyush Goyal, viewing the situation as opportunity to become more robust
The trade relations between India and the United States have been strained recently, following the imposition of new tariffs on Indian imports by the Trump administration. These tariffs, which took effect on August 7, 2025, and are scheduled to increase further on August 27, 2025, primarily target India's merchandise exports to the US and are linked to India's continued crude oil purchases from Russia.
The additional 25% tariff, while causing short-term trade tensions, has had limited macroeconomic impact on India, according to S&P Global Ratings. The organization projects that India's GDP growth will remain steady at around 6.5% in the fiscal year, attributing this to India's relatively limited trade-oriented economic structure and strong economic fundamentals.
The US Treasury Secretary has described India as being "recalcitrant" in trade talks, particularly due to India's reluctance to open key sectors like agriculture and dairy to American products. The US aims to conclude broad trade agreements by the end of October 2025, but the additional tariffs serve as both a pressure tactic related to geopolitical issues and a lever in trade negotiations.
The tariffs have led to increased friction in bilateral trade talks and public backlash within India towards US imports. However, the broader outlook for India's growth remains stable. The resolution likely lies in pragmatic trade negotiations that balance India's domestic priorities with US demands, alongside diplomatic efforts to untangle trade from geopolitical conflicts.
Both sides aim to negotiate comprehensive trade deals addressing tariffs, market access, and trade barriers before the October 2025 deadline. India is also focusing on diversifying its exports and reducing dependence on sectors sensitive to US tariffs. The country may consider selective opening, particularly in cautious sectors like agriculture and dairy, which have been sticking points in talks.
India is engaged in trade negotiations with various partners, including the US, European Union, Chile, Peru, and New Zealand. A US delegation will visit New Delhi on August 25 for a fresh round of India-US trade talks.
Despite the trade tensions, India has demonstrated resilience during the Covid-19 crisis, managing domestic needs and even supplying vaccines abroad. The nation's morale is high, and the economy has a lot of strength, according to Commerce and Industry Minister Piyush Goyal. India's goods and services exports in 2024-25 reached USD 825 billion, and Goyal expressed optimism that exports in 2025-26 will surpass the previous year's record.
Arvind Panagariya, Chairman of the Sixteenth Finance Commission, responded to Trump's derision of India as a "dead economy," noting India's growth rate of over 7% in real terms and faster still in dollar terms. Goyal himself declared that India will turn adversity into advantage following steep new tariffs imposed by President Trump, reaffirming India's confidence and strength in the face of challenges.
- The ongoing trade tensions between India and the United States over new tariffs have sparked discussions across India's business, politics, and general-news sectors.
- The Indian finance ministry is closely monitoring the impact of increased tariffs on the Indian economy, particularly regarding merchandise exports to the US.
- Indian businesses, especially those in the agriculture and dairy sectors, are closely watching the outcome of trade negotiations with the US, as their relevance to the business world could be significantly impacted.
- As India navigates these trade disputes, concerns about technology and cybersecurity might also emerge, given the complex interplay of trade, business, and geopolitical interests.
- Analysts have pointed out that despite the trade challenges, India's reputation as a financial powerhouse and its resilience in the face of crises, such as the COVID-19 pandemic, could potentially lead to new business opportunities and alliances in international finance.
