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Modi Mulls Lower Tariffs, More Imports to Counter Trump’s Threats

Modi Mulls Lower Tariffs, More Imports to Counter Trump’s Threats

India’s government is actively considering strategies to mitigate potential trade impacts from U.S. President Donald Trump’s threatened tariff policies. The Modi administration is evaluating a range of options, including lowering tariffs and increasing imports from the United States, particularly in response to Trump’s warnings about imposing higher tariffs on countries with which the U.S. has a trade deficit.

Lowering Tariffs: Indian officials are discussing the possibility of reducing import duties on certain goods, which could include products like bourbon whiskey and agricultural items such as pecan nuts. This move aims to foster better trade relations and potentially appease the Trump administration.

Increasing Imports: The government may consider importing more goods from the U.S., including steel, oil, and whiskey. This approach is seen as a way to balance the trade surplus that India has with the U.S., which was reported at $35.3 billion for the fiscal year ending March 31.

Limited Trade Deal: Discussions are also underway regarding a limited trade agreement with the U.S., which would involve reducing “most-favored nation” tariffs that apply to countries without a bilateral trade deal with India. This strategy mirrors attempts made during Trump’s first term.

Sector-Specific Focus: The government is looking at specific sectors that could benefit from these changes, including electronics, textiles, and chemicals, especially if the U.S. imposes higher tariffs on Chinese goods.

The backdrop of these discussions includes Trump’s broader strategy of imposing tariffs on various nations, which he argues is necessary for achieving trade fairness. India’s proactive measures aim not only to avoid direct confrontation but also to position itself advantageously in light of potential shifts in global trade dynamics, particularly related to U.S.-China relations.

As these plans are still under discussion and not finalized, they reflect India’s intent to navigate complex international trade landscapes while protecting its economic interests.