India needs a multipronged strategy to sail through this new era of trade

What began as a set of ‘reciprocal’ global tariffs in seeming pursuit of trade parity has morphed into a geo-economic play, with India now facing a combined 50% hit—25% baseline tariff plus another 25% penalty linked to our oil imports from Russia. 

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The fallout strikes at the heart of India’s export engine. In garments and textiles, where margins are wafer thin, even a modest tariff bump-up pushes orders to Vietnam or Bangladesh. In gems and jewellery, consumer demand is so price-sensitive that higher duties can instantly choke billions in trade, triggering a cascade of job losses.

Engineering goods present a more uneven picture. Auto components and machinery are struggling to stay competitive, while electronics assembly could gain from the ‘China plus one’ diversification push, provided exporters adapt to the onerous compliance norms that are now standard in American sourcing. 

Pharmaceuticals and IT remain relatively resilient, but India’s dependence on Chinese inputs for bulk drugs is an Achilles’ heel, proof that no sector is fully insulated. Meanwhile, a US crackdown on trans-shipment through third countries has further tightened the noose, forcing importers to shorten contracts, demand digital origin certifications and embed tariff pass-through clauses in agreements.

Also Read: India must flex its digital-market muscle to counter Trump tariffs

This makes it imperative for India to go beyond the comfort of diversification and pursue targeted negotiations with the US administration. Protecting  strategic interests must be the central objective. For pharmaceuticals and electronics, where India’s products reinforce America’s domestic supply chain resilience, an effort must be made for continued carve-outs to keep these flows open. In labour-intensive industries such as garments and gems,  securing partial exemptions could help preserve millions of jobs. In sunrise  sectors like semiconductors and EV  batteries, India must position itself not as a supplicant but as a trusted partner whose integration strengthens Washington’s own industrial strategy.

The framework for such negotiations is critical. India cannot afford to approach Washington with a one-way plea for concessions. Instead, it must present solutions that reconcile its domestic sensitivities with US strategic interests. A practical instrument of use here is the Tariff-Rate Quota (TRQ). Rather than rejecting tariff concessions outright, India can propose TRQs that allow limited volumes of sensitive imports—say, in farm and dairy products—thus giving the US a political win while protecting India’s vulnerable producers from unfair competition. 

The US itself frequently uses TRQs to unlock deals. For India, this tool can buy breathing space: domestic industry gets room to stabilize, retain market presence and preserve jobs until long-term reforms and diversification take effect.

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But even as negotiations provide relief, Indian industry must recognize that its products need to move up the value chain. Branded jewellery withstands tariff shocks better than cut stones; design-led garments command higher margins than commoditized apparel. Compliance too is no longer optional but a condition for market entry. Exporters who invest in digital certification systems and sustainability audits will not only face fewer customs delays, but also enjoy greater buyer confidence. A dedicated India–US customs verification corridor could be one such measure to reinforce these advantages.

Trump’s tariff reset is not a passing storm but a structural shift in global trade. If India treats it as episodic, firefighting each new duty as it arises, it will remain perpetually on the defensive. But if this shock spurs companies to climb the technology ladder, embed deeply in trusted global supply chains and build shock-resilient export  models, adversity could be transformed into lasting advantage.

Tariffs, truces and trans-shipment will define the Trump era. Whether India emerges as collateral damage or as a competitive exporter will depend less on Washington’s moves and more on how decisively we seize this moment.

These are the author’s personal views.

The author is head of public policy, India & South Asia, Uber, and former additional secretary, ministry of commerce.