Do you like tariffs? Well, the answer depends on who you ask.
If you’re the one charging and collecting tariffs—or if tariffs are protecting you from foreign competition—your answer is probably yes. But if you’re the one paying tariffs, or if they make you uncompetitive, your answer will be an emphatic no.
Needless to say, if you are a country suddenly slapped with a 50% tariff on most of your exports to your biggest market, it won’t be pleasant. That is exactly what has happened to India. Barring pharma and tech, nearly all Indian exports to the U.S. are now subject to 50% tariffs.
Estimates suggest this will impact $60–80 billion worth of Indian exports to the U.S.—almost 2–2.5% of India’s GDP. If the tariffs remain in place, many of these exports will no longer be competitive, leading not only to a sharp drop in export figures but also to weaker GDP growth.
Industries such as textiles, leather, gems and jewellery, and shrimp will be hit particularly hard. Already running on tight margins, they cannot survive a 50% tariff. For U.S. importers, these products will simply become unviable. Since these sectors are highly labor-intensive, millions of Indian jobs are at risk.
There is no doubt that India must act to address this sudden and excessive tariff hike from the U.S.—our largest export destination and the world’s biggest consumer market. Here’s what India can and should do, and a few things it probably shouldn’t:
1. Seek a temporary suspension of tariffs
The sudden nature of these duties, on top of their sheer size, makes them especially damaging. Whatever the U.S.’s issues with India, the two countries have shared over two decades of close ties. For other countries (like China, for example), the U.S. has deferred tariffs. India’s first step should be to formally request a 90–180 day suspension, to allow room for negotiation. At the same time, India should be prepared to discuss rationalizing its own tariffs on U.S. goods, which brings us to the next point.
2. Reset and review Indian tariffs on U.S. goods
In general, India has charged higher tariffs on U.S. products than the U.S. has on Indian goods—until the recent tariff hikes. This was ostensibly to protect Indian farmers (by taxing American agricultural imports) and domestic industry. Agriculture may still warrant some protection given its political sensitivity and the livelihoods it supports.
But our industrial tariffs? Perhaps we’ve kept them too high for too long. On the one hand, we say to the world, “This is the new India—treat us as equals.” On the other, we plead victimhood by saying, “We are poor; we need high tariffs to protect our industry.” We can’t have it both ways.
American automobiles are taxed over 100%. U.S. liquor faces duties as high as 150%. Have we protected Indian industry so much that it no longer innovates to compete globally? Reducing tariffs on U.S. goods could strengthen India’s case for America to lower tariffs on ours.
3. Resolve the Russian oil issue diplomatically
Of the 50% tariff, half—or 25%—is a penalty for India’s continued purchases of Russian oil, effectively an indirect sanction. Strikingly, India is the only country penalized this way, even though others also buy Russian oil. Why has India been singled out?
Diplomatic efforts must address this. If suspending Russian oil imports for a year or two helps India buy time for its industries, it may be worth considering. Perhaps by then the war will have ended, and the issue may no longer exist.
4. Send “feelers of love” to others
Our affection for America has always been strong, and it should remain so. But love can sometimes be taken for granted. If India’s goodwill is being overlooked, a few subtle signals to other powers could remind America that we do have options.
5. Avoid chest-thumping and bluster
Yes, the tariffs are unfair. Yes, some economists even call tariffs a form of economic warfare. It is tempting to respond with bravado—“hit back,” “show defiance,” “stick it to them.” That might score short-term points in domestic politics, and the media might love the spectacle. But it won’t solve the problem.
History shows that countries that confront the U.S. with chest-thumping rarely gain anything. Even China, despite its many disputes with America, usually avoids bluster and sticks to calm, pragmatic negotiation. India should do the same.
The imposition of 50% tariffs on India by the U.S. is a major event. We must take it seriously and respond with nuanced, measured steps. Love in the times of tariffs may be difficult, but then— in life or in international relations – when has love ever been easy?