Opinion On Trump, tariffs and trade, India has the first mover’s advantage
Unlike nations that have chosen confrontation, India can deploy its diplomatic bandwidth to pursue favourable trade terms, positioning itself as a trusted ally
President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House, in Washington. (AP/PTI) 
On an otherwise unremarkable morning, I watched the press conference that would mark a seismic shift in global commerce. US President Donald Trump unveiled a new wave of trade tariffs — sweeping levies aimed at recalibrating America’s trade relationships under the banner of “America First”. In the theatre of global geopolitics, storms rarely announce their arrival. They brew quietly, veiled in the language of nationalism, self-interest, and sovereign assertion. Yet in every such tempest lies the promise of opportunity for nations astute enough to recognise it and bold enough to seize it.
India has a long history of weathering such storms. During the pandemic, while much of the world was in the grip of uncertainty, India became a global pharmacy — delivering over two billion vaccine doses, supporting 90-plus nations, and creating digital platforms like CoWIN. When the Russia-Ukraine war unleashed chaos across energy markets, India deftly navigated the turmoil — increasing discounted oil imports from Russia, stabilising domestic inflation, and exporting refined fuel to Europe while maintaining geopolitical balance.
India is now subject to a 26 per cent tariff. However, our key competitors in textiles, electronics and low-cost manufacturing — Vietnam, Bangladesh, and China — are facing significantly steeper duties. Among major Asian economies, only Malaysia falls within a comparable range at 24 per cent, and yet, it does not rival India across the full spectrum of critical export sectors. With its stable policy environment and demographic advantage, India stands uniquely positioned to benefit in the long term.
What does this signify for India? The country has become more cost-competitive. As American retailers re-evaluate their sourcing strategies, Indian suppliers are emerging as viable and vital alternatives. As global companies seek to de-risk from an over-reliance on China and navigate volatility across Southeast Asia, India’s democratic resilience, policy continuity, and vast operational scale place it in a favourable position. Sectors like electronics stand to gain significantly as China and Vietnam contend with high tariffs. A telling example lies in Apple’s evolving supply chain, in which partners such as Tata Electronics are scaling up domestic production to serve growing US demand. The US tariffs could, in fact, accelerate this shift, nudging more firms to tap into India’s Production-Linked Incentive scheme (offering a 6.5 per cent benefit in electronics).
The US is one of India’s largest trading partners. Greater access to this vast market holds immense potential for India’s growth trajectory. Washington, too, recognises the strategic imperative of partnering with 1.4 billion Indians to counterbalance China. India holds a distinct diplomatic edge, having engaged in early and constructive dialogue with the US. Unlike nations that have chosen confrontation, India can deploy its diplomatic bandwidth to pursue favourable trade terms, positioning itself as a competitive exporter and a trusted trade ally.
Beyond India-US ties, examining how this evolving trade landscape will reshape India’s global commercial engagements is equally important. As protectionist winds gather strength, nations worldwide are accelerating efforts to forge new trade alliances. India, already ahead of the curve, has signed over 10 free trade agreements in the past five years with key partners including the UAE, Australia, and Mauritius. Negotiations with the European Union, the UK, the European Free Trade Association and several others are progressing steadily. These agreements not only open doors to stable, tariff-friendly markets beyond the US, but also provide Indian exporters with a strategic hedge, reducing exposure to sudden and unilateral disruptions.
Over the past decade, we have steadily invested in our people, infrastructure, and capacity to innovate. With an inward-focused yet globally attuned economic model, India is uniquely positioned to use this moment to accelerate key reforms. Our commitment to green manufacturing, robust digital infrastructure, and R&D-driven growth ensures that Indian exports are competitive, future-ready and environmentally sustainable. The shifting global trade landscape can fuel job creation, skill development, and the emergence of new business models and industrial ecosystems. It can also catalyse long-term foreign direct investment into India’s rapidly expanding markets. With a vast consumer base and one of the fastest-growing emerging economies, India is ready not just to respond to change, but to lead it.
The Federation of Indian Export Organisations (FIEO) projects a $50 billion opportunity arising from this disruption. This is not merely a windfall — it marks a fundamental rebalancing of global supply chains. While a short-term impact is inevitable, the PHD Chamber of Commerce and Industry (PHDCCI) has projected that India’s GDP will see only a marginal 0.1 per cent hit due to the newly imposed US tariffs. This reflects the nation’s growing domestic manufacturing strength, competitive pricing, and strong policy support. The robustness of US domestic demand and negotiations by American importers seeking price relief should be monitored.
With our vast domestic market, maturing industrial base, expanding diplomatic reach, and unwavering policy momentum, India stands not at the mercy of global shifts, but at the helm of their redirection. As supply chains realign, trade corridors evolve, and partners seek reliability over rhetoric, India offers not just an option, but the optimal path forward.
The writer is professor of finance, XLRI Xavier School of Management and a BJP leader
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