India holds fire as Trump slaps tariffs

Trump launches trade war with massive tariffs on global partners, sparking market plunges and warnings of reprisal.

U.S. President Donald Trump launched a full-scale trade war on Thursday (Wednesday, by U.S. time), announcing massive “reciprocal tariffs”, ranging from 10% to 49%, on U.S. imports from its trading partners around the world, India was not spared, being hit with a 26% tariff on its exports to the U.S. despite ongoing talks for a trade agreement.

The tariffs sparked warnings of reprisal from China and the European Union — which were hit with additional tariffs of 34% and 20% respectively — though India’s reaction was muted. Global markets plunged in response, from Japan’s Nikkei which lost 4% and European markets that dropped more than 2% each, to India’s Sensex, that shaved more than 300 points, while the Nifty dropped as well. In the U.S., the Dow Jones fell over 3% in the first hour of trading, while the Nasdaq crashed 4%.

Despite weeks of ongoing negotiations between U.S. Trade Representatives and Indian officials over a Bilateral Trade Agreement, Mr. Trump announced that India — which he claimed imposed duties of 52% on the U.S. — would face a “discounted” tariff of 26% on its exports to the United States. (Some confusion persisted on the applicable rate, as Mr. Trump announced a 26% tariff, while the Commerce Ministry quoted U.S. documents to say it was 27%.) The Commerce Ministry said it was examining the measures and assessing their impact, including possible “opportunities”.

The tariff hikes, which Mr. Trump has said for weeks would herald April 2 as “Liberation Day” for the U.S., were considerably broader and higher than experts had predicted.

The U.S. President invoked his authority under the International Emergency Economic Powers Act (IEEPA) of 1977 to address large and persistent U.S. goods trade deficits, which he called a “national emergency”. He announced a 10% baseline tariff on all countries, which will take effect from April 5, 2025. An individualised reciprocal higher tariff on the countries with which the U.S. has the largest trade deficits will also be imposed from April 9, 2025.

“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Mr. Trump said in his remarks in Rose Garden outside the White House.

India’s official response to the announcement was subdued.