New Delhi, May 21, 2025 – Tensions between India and the United States are flaring up again, this time over trade policy. India is considering the imposition of retaliatory tariffs on a range of American products in response to what it calls “unjustified and discriminatory” trade practices by the U.S. administration. The move could mark a new phase in the ongoing global reshuffling of economic alliances and policies.
What Triggered the Dispute?
The primary trigger for India’s proposed retaliatory tariffs is the reintroduction of trade restrictions by the United States on Indian steel and aluminum exports. The U.S. has recently reinstated higher duties—originally imposed under Section 232 of the Trade Expansion Act—citing national security concerns. This decision affects Indian exports worth hundreds of millions of dollars annually and has been perceived by New Delhi as an unfair trade barrier.
India had earlier been granted an exemption from these tariffs, but recent policy shifts in Washington under the “America First” economic agenda have revoked that exemption. Indian officials argue that the move violates World Trade Organization (WTO) rules and undermines mutual economic cooperation.
India's Retaliatory Strategy
In response, India is preparing to slap tariffs on a selection of U.S. goods, including almonds, apples, walnuts, and select industrial products. These tariffs are designed not only to recover economic losses from the U.S. duties but also to send a clear political message.
According to trade experts, the proposed Indian tariffs could affect U.S. exports worth over $1.5 billion annually. India’s Ministry of Commerce has already issued a notification seeking public feedback before implementing the new levies, which are expected to be finalized within weeks.
The Geopolitical and Economic Stakes
This trade spat comes at a time when both India and the U.S. are seeking to strengthen strategic and defense ties in the Indo-Pacific region. Analysts warn that escalating trade tensions could complicate this growing partnership, especially as India pushes to expand its manufacturing sector under the “Make in India” campaign.
Moreover, India is increasingly positioning itself as an alternative manufacturing hub amid U.S.-China decoupling. A trade conflict with Washington could impact investor confidence and delay key bilateral initiatives.
Historical Context of U.S.-India Trade Frictions
This is not the first time India and the U.S. have been at odds over trade. In 2019, the U.S. withdrew India’s preferential trade status under the Generalized System of Preferences (GSP), affecting exports worth over $5.6 billion. India had then responded with a limited set of tariffs but chose to maintain dialogue.
Now, with mounting economic pressures and a more assertive trade policy under Prime Minister Narendra Modi’s administration, India appears ready to adopt a firmer stance.
What It Means for Global Trade
India’s move underscores a broader trend of retaliatory trade policies and the decline of multilateral dispute resolution mechanisms. With the WTO’s appellate body largely defunct, countries are increasingly resorting to unilateral actions and bilateral negotiations.
If the U.S. and India fail to resolve this issue diplomatically, it could trigger similar actions by other emerging economies facing American tariffs, potentially leading to a new wave of trade protectionism.
Looking Ahead
While India remains open to dialogue, the message is clear: it will not hesitate to defend its economic interests. As global supply chains realign, trade partners are reassessing their strategies, and India’s latest move may set the tone for future negotiations with not just the U.S., but with all major trading partners.
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