As India prepares to cut tariffs ahead of a crucial meeting between Prime Minister Narendra Modi and US President Donald Trump, the move signals a calculated attempt to maintain trade stability while avoiding retaliatory measures. With the US administration pushing for reciprocal tariffs and considering steep duties on steel and aluminium imports, India’s pre-emptive tariff reductions in select sectors could be a strategic manoeuver to keep economic ties intact. However, the broader implications of such concessions need closer scrutiny. India’s economic policies have traditionally aimed at balancing domestic industry protection with global trade integration. The tariff reductions ~ targeting electronics, medical and surgical equipment, and chemicals ~ suggest a willingness to accommodate US demands while aligning with India’s own production and consumption patterns. This approach may seem pragmatic, given the rising tensions in global trade, but the risk of over-accommodation remains. Concessions on items where India has strong domestic producers or potential for self-sufficiency could undermine long-term industrial growth. One of the key concerns is the impact on India’s steel and aluminium exports.
The Trump administration’s move to impose a 25 per cent tariff on these metals could significantly affect Indian engineering goods, a sector that contributes substantially to overall exports. While India’s diplomatic engagement may help mitigate some of the harshest trade measures, there is no guarantee of exemption. The tariff cuts appear to be a goodwill gesture aimed at securing a better negotiating position, but whether they yield reciprocal benefits remains uncertain. Beyond trade, the meeting also carries geopolitical weight. The US has increasingly positioned India as a counterbalance to China’s influence in the Indo-Pacific, although for now the Americans seem to be more concerned with trade than on strategic matters. Strengthening economic ties serves this larger objective. The discussions will likely extend beyond tariffs to include defence cooperation, technology partnerships, and supply chain resilience. However, the recent deportation of Indian nationals from the US could cast a shadow over the talks, necessitating a delicate diplomatic approach.
A potential “mini trade deal” has been hinted at, but its contours remain unclear. If structured well, such an agreement could bring immediate relief to specific sectors without locking India into long-term disadvantages. However, India must ensure that any deal it negotiates is not one-sided. Past experience with trade negotiations suggests that hurried concessions can sometimes lead to imbalances that are difficult to rectify later. Ultimately, India’s tariff reductions ahead of the visit are a short-term tactical move aimed at preventing a trade standoff. Whether they translate into tangible benefits will depend on how effectively India leverages its position during negotiations. The challenge lies in striking a balance ~ offering enough to keep trade relations steady without compromising domestic economic interests. The outcome of this meeting will not only shape immediate trade policies but also set the tone for India’s broader engagement with the US in the coming years.