Trump Announces Reciprocal Tariffs Amid Ongoing Trade Talks with India

By Chetna Gill

Cover Image Attribute: U.S. Vice President JD Vance and House Speaker Mike Johnson (R-LA) applaud as President Donald Trump delivers an address to a joint session of Congress in the House Chamber at the U.S. Capitol in Washington, DC, on Tuesday (March 4, 2025). / Source: AFP

In a sweeping address to a joint session of the U.S. Congress on Tuesday, President Donald Trump unveiled plans to impose reciprocal tariffs on a range of trade partners starting April 2, citing high tariffs imposed by countries like Brazil, India, and China. The announcement has sparked concerns about potential trade wars and their impact on global economic growth, even as Indian officials expressed cautious optimism about avoiding the tariffs through ongoing negotiations with Washington.
Trump’s speech, the longest presidential address to lawmakers on record and his first since beginning his second term, underscored his administration’s intent to address what he described as decades of unfair trade practices. “If you don’t make your product in America...you will pay a tariff, and in some cases, a rather large one,” Trump declared. “Other countries have used tariffs against us for decades, and now it’s our turn to start using them against those other countries.”
While Trump did not explicitly single out India as an immediate target for the April 2 tariffs, he named it alongside Brazil, Canada, China, Mexico, and the European Union as regions imposing “tremendously higher tariffs” on U.S. goods. “It’s very unfair. India charges us auto tariffs higher than 100%. China’s average tariff on our products is twice what we charge them. And South Korea’s average tariff is four times higher,” he said, emphasizing that the reciprocal measures would “kick in” to balance trade relationships.
The timing of Trump’s remarks coincided with a critical visit by India’s Commerce Minister Piyush Goyal to the United States, where he is engaging in trade negotiations from March 3-8. Goyal’s agenda includes meetings with top U.S. officials, such as U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick, to chart a roadmap for a bilateral trade agreement. According to sources familiar with the talks, who spoke on condition of anonymity, these negotiations could shield India from the looming tariffs.
“The negotiations are on, and we have agreed on having the first tranche of a mutually beneficial bilateral trade agreement by the fall of 2025,” one source said. Another added that Goyal’s visit builds on a joint statement from a February 13 meeting between Trump and Indian Prime Minister Narendra Modi, where both leaders committed to deepening trade ties. “This visit is part of efforts to negotiate the first tranche of the bilateral trade agreement by the fall,” the second source noted.
The optimism stems from a shared goal set during the February meeting to more than double U.S.-India trade from $129.2 billion in 2024 to $500 billion by 2030. The joint statement highlighted plans for a “mutually beneficial, multi-sector Bilateral Trade Agreement (BTA)” by fall 2025, focusing on fairness, national security, and job creation. Both sides also pledged to reduce tariff and non-tariff barriers and enhance supply chain integration.
India’s negotiating stance may be bolstered by its relatively smaller trade deficit with the U.S.—$45.7 billion in 2024—compared to larger deficits with China ($295.4 billion), Mexico ($171.8 billion), Japan ($68.5 billion), and Canada ($63.3 billion). Sources noted that India is open to addressing U.S. demands, such as lowering tariffs on American automobiles, a key Trump administration priority, in exchange for concessions like easier mobility for Indian professionals.
“This signifies that India’s automobile sector is competitive and can face competition from American automakers, provided the U.S. reciprocates,” one source explained. India is reportedly employing a similar strategy in its ongoing free trade agreement (FTA) talks with the European Union and the United Kingdom, balancing tariff reductions with broader economic benefits.
Trump’s tariff threats have rattled global markets, with emerging economies particularly vulnerable to trade disruptions. However, signs of flexibility from the U.S. administration provided some relief on Wednesday. U.S. Commerce Secretary Howard Lutnick hinted that tariffs on Mexico and Canada, which had triggered a global sell-off, might be scaled back. Asian stock exchanges, including Indian indices, closed in the green, reflecting cautious optimism about the U.S.-India talks.
Analysts warn, however, that a full-scale trade war could still derail global growth. The International Monetary Fund has previously cautioned that escalating tariffs could shrink the global economy by as much as 7% in a worst-case scenario. For now, the focus remains on whether diplomacy can avert such an outcome.
Trump’s reciprocal tariff policy reflects a cornerstone of his economic agenda: addressing trade imbalances he deems unfair to American workers and businesses. In his address, he framed the April 2 measures as a long-overdue response to decades of exploitation. “This system is not fair to the U.S. and never was,” he asserted, promising that “whatever they tariff us, other countries, we will tariff them.”
The U.S. trade representative’s office reported that America’s total trade in goods with India reached $129.2 billion in 2024, with exports to India at $41.8 billion and imports at $87.4 billion. Trump’s push for reciprocity aims to narrow such gaps, though critics argue that tariffs could raise costs for U.S. consumers and strain international relationships.
India’s decision to engage Trump early in his second term signals a proactive approach to safeguarding its economic interests. The Modi-Trump meeting in February laid the groundwork for this strategy, emphasizing “new, fair-trade terms” to achieve ambitious trade goals. By dispatching Goyal to Washington, New Delhi appears intent on buying time and crafting a deal that aligns with both nations’ priorities.
As Goyal’s visit progresses, the outcomes of his discussions with U.S. officials will likely determine whether India can sidestep the April 2 tariffs. A successful negotiation could set a precedent for other trade partners navigating Trump’s tariff regime, offering a blueprint for balancing national interests with global cooperation.
With the clock ticking toward April 2, the U.S.-India trade talks represent a critical test of diplomacy in an era of rising protectionism. For Trump, the tariffs are a tool to level the playing field; for India, they are a challenge to be met with strategic concessions and dialogue. As markets and policymakers watch closely, the stakes extend beyond bilateral ties to the stability of the global economy.
Whether these negotiations yield a breakthrough by fall 2025—or falter under the weight of Trump’s tariff deadline—remains to be seen. For now, both sides appear committed to finding common ground, offering a glimmer of hope amid the specter of a broader trade conflict.

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