A second Donald Trump presidency was always expected to disrupt the global order, but the speed and intensity of his latest tariff announcements have caught many off guard. The ripple effects are already being felt worldwide, and India — one of America’s key trading partners — stands to lose significantly. From pharmaceuticals and textiles to IT services and agricultural products, billions of dollars worth of Indian exports now hang in the balance. However, this isn’t just about numbers or diplomatic maneuvering. The real consequences are far more personal: rising prices, businesses struggling to stay afloat, and economic uncertainty that could hit the middle class especially hard.
With Trump’s reciprocal tariffs set to take effect on April 2, the question is no longer whether India will feel the impact — it's how deeply it will be affected and what steps it can take to protect itself. A full-blown global trade war now seems more plausible than ever, and experts are warning that India, as an emerging economy, faces an uphill battle in mitigating the fallout.
Dr. Manoranjan Sharma, Chief Economist at Infomerics Valuation and Ratings Ltd., explains that shielding India from the consequences of Trump’s tariffs in today’s increasingly VUCA (Volatile, Uncertain, Complex, and Ambiguous) global economy is "uneasy, if not impossible." He points out that Trump has weaponized trade policy, using higher reciprocal tariffs as a core element of his broader geopolitical strategy. This leaves India in a precarious position.
"Theoretically, India could retaliate by imposing matching tariffs on American goods," Dr. Sharma explains. "But practically, this is incredibly difficult — if not impossible — given the vast difference in the size and strength of the two economies, America’s technological edge, and its global military influence."
Moreover, India’s complicated relationship with China complicates the situation further. "Given India's difficult relationship with China, there is no objective way India can afford to offend the US in this multi-layered international landscape," he adds. This forces India into a delicate balancing act, where it must protect its economic interests without jeopardizing its strategic partnerships.
SOFTENING THE BLOW
With key exports under threat, India must diversify its trade partners and bolster its domestic economy. Experts suggest that one way to cushion the impact is by accelerating domestic manufacturing through the Atmanirbhar Bharat (Self-Reliant India) initiative. Ajit Mishra, Research Head at Religare Broking, believes that India must urgently secure trade deals with Europe, ASEAN nations, and Gulf countries to reduce its reliance on the American market.
"FTAs with the UK and EU are already in the pipeline," Mishra notes, "but these agreements alone won’t be enough to fully counterbalance the loss of US trade. Since the US remains India's largest trading partner and the top export destination, it’s unrealistic to expect any single trade deal to offset such a major disruption."
Mishra also highlights the need for India to explore alternative markets and alliances, including strengthening BRICS, expanding IT exports to emerging regions, and promoting rupee-based trade to ease dependence on the US dollar. "Diversification is key — both in terms of markets and sectors," he says.
Some argue that India should look to China’s manufacturing model for inspiration. But replicating China’s success won’t be easy. Currently, manufacturing accounts for only 13-15% of India’s GDP — a far cry from China’s industrial powerhouse status. Mishra believes that blindly copying China isn’t the answer.
"India has an enormous, young workforce, but that alone isn’t enough," he explains. "We need to prioritize high-value manufacturing — especially in sectors like electronics, pharmaceuticals, and green energy — while simultaneously investing in R&D and upskilling our workforce. The goal should be to create an ecosystem where India becomes indispensable in global supply chains."
Instead of copying China, Mishra suggests India adopt a more holistic, technology-driven strategy. "Industrial growth must go hand in hand with innovation and digital transformation. That’s where India’s strength lies — not in low-cost mass production, but in producing smarter, high-quality goods that the world needs."
IF NOT, THEN WHAT?
Trade agreements and regional alliances can provide some relief, but India’s domestic industries will need to adapt — and fast. Dr. Sharma emphasizes that businesses must rethink their entire operations, from sourcing raw materials locally to modernizing production processes and building more resilient supply chains.
"Domestic firms need to overhaul their inputs, outputs, and finished products to cut costs, maintain operational efficiency, and ensure an uninterrupted supply chain," he explains. Initiatives like Make in India and production-linked incentives (PLIs) could play a crucial role in supporting this transition. However, Sharma acknowledges that this won’t be an easy shift. "It’s difficult, but by no means undoable," he insists.
The real test, though, will come at the consumer level. Rising tariffs could lead to higher prices on everything from essential medicines to technology, impacting household budgets and changing job prospects across industries. Small and medium-sized businesses — which make up the backbone of India’s economy — may be particularly vulnerable to disruptions in supply chains and rising input costs.
The government’s response will be pivotal in determining how deeply the trade tensions affect everyday Indians. Policymakers will need to strike a balance between immediate economic relief and long-term structural reform. Tax incentives, targeted subsidies, and support for struggling sectors may be necessary to keep businesses afloat and prevent job losses.
THE LONG GAME
India’s best path forward is to take a measured, strategic approach that prioritizes long-term resilience over short-term gains. "India’s response must be gradual, calibrated, and pragmatic to weather the transition period," Dr. Sharma advises.
If India plays its cards right — by diversifying trade partners, strengthening domestic industries, and embracing technological innovation — it could emerge stronger and more self-reliant on the other side. The road ahead won’t be easy, but with the right mix of diplomacy, economic reform, and strategic foresight, India has a chance not just to withstand the global turbulence, but to turn the crisis into an opportunity for sustainable growth and global leadership.
The challenge now is whether India’s leaders, businesses, and industries can move fast enough to adapt — before the next wave of tariffs and economic shocks hits.
