Donald Trump’s second term as president could bring fundamental changes to global trade, and India could be caught in the crossfire. In particular, the reimposition of high tariffs on BRICS countries is causing concern.
In his inaugural address, President Trump declared, “If the BRICS countries continue to de-dollarize, they will face 100% tariffs,” directly warning India, China, Brazil, and others.
India has been labeled a “tariff king” by President Trump in the past, and it may once again be the subject of intense scrutiny. The trade relationship between the United States and India has expanded significantly, with bilateral trade reaching $120 billion in 2024, but India’s large surplus has made it a target for retaliatory measures. Analysts have warned that such tariffs could destabilize key sectors and reshape trade trends.
President Trump’s comments about imposing 100% tariffs on BRICS countries come as they seek to reduce their dependence on the US dollar. Russia and China have led the de-dollarization effort, but the Reserve Bank of India said it was only aimed at reducing risks to domestic trade, rather than abandoning the dollar.
Accumulation of India’s trade with the US
The US remains India’s largest trading partner, accounting for over 18% of India’s exports. Products ranging from textiles to pharmaceuticals drive this relationship. Unlike China, where trade imbalances are fueling tensions, India enjoys a more favorable trade balance with the United States. But efforts to diversify exports could hurt multiple industries, from IT to automobiles, if tariffs are raised.
President Trump also announced a “Foreign Revenue Service” to collect tariffs and tariffs, signaling a new era of tough trade enforcement. He described it as a way to “reclaim the American dream” and promised billions of dollars in foreign revenue.
Possible impact
If H-1B visa rules are tightened under President Trump’s “America First” policy, India’s IT services, which are highly dependent on the U.S. market, could be affected. Meanwhile, high tariffs on cars and medicines could lock Indian products out of key markets.
India has previously imposed counter-tariffs on imports of steel and aluminum from the United States in 2018. Trade experts have suggested that a similar response could be warranted if President Trump imposes new tariffs. But disruptions to global supply chains could also present an opportunity for India to attract manufacturing investment as companies diversify away from China.
gap
The tariff gap between India and the US remains one of the largest among major trading countries, according to an analysis of trade data. China has a difference of 478 points, while India has a difference of 25 points, highlighting the disparity in treatment.
However, India’s domestic tariff increases on US products, such as the 30% tariff on cigarettes, stand in sharp contrast to the 60% tariff that the US imposes on Indian exports. (Source: World Bank)
President Trump’s tariff policies could significantly disrupt global trade flows. While this poses risks such as reduced export demand, it also presents an opportunity for India to become a central player in a reconfigured supply chain.
