NEW DELHI: A potential India-US trade deal will iron out the impact of Trump tariffs, according to a report by Nirmal Bang Equities.
The report stated that as the United States, under President Donald Trump, continues to impose tariffs on global trade, India is also feeling the pressure. However, the Indian government is taking steps to address the challenges posed by these tariffs.
It said, “India not immune to tariffs but will work around it…… A potential India-US trade deal may eventually iron out some of the issues around tariffs and market access on both sides.”
The report highlighted that Trump has announced that India may soon face reciprocal tariffs, with an official decision expected on April 2. The US has already imposed a 25 per cent tariff on steel and aluminum imports, but these metals make up less than two per cent of India’s exports to the US, limiting the direct impact.
However, the bigger concern is the possibility of tariffs on other key Indian exports, including electronics (such as smartphones), automobiles, gems and jewellery, textiles, chemicals, and seafood.
While some chemical exports could be affected, pharmaceutical products are unlikely to face significant tariffs since they are considered essential by the US government.
The report mentioned that in the worst-case scenario, about 30 per cent of India’s merchandise exports to the US, amounting to around USD 25 billion, could be impacted.
One of the key areas where trade imbalances exist between India and the US is in the agricultural sector. The tariff differential between the two countries is highest for agricultural products.
However, since agricultural goods do not make up a significant portion of India’s exports to the US, the impact on this sector may be limited.
In response to the tariff challenges, India is actively engaging with the US to find solutions. Measures have been introduced in the 2025 Union Budget to ease trade tensions.
For example, India has reduced tariffs on motorcycles and alcoholic beverages, showing a willingness to make adjustments. Additionally, India has committed to defense purchases from the US and is exploring oil imports as part of its strategy to strengthen trade ties.
Looking ahead, a potential India-US trade deal could help resolve some of these tariff-related concerns and improve market access for both countries. Until then, India is focused on minimizing disruptions and ensuring that its exports remain competitive despite the changing trade landscape.