Trump’s Tariffs Hit Mexico, Canada, and China—India Exempt Amid Strengthening Trade Relations
US President Donald Trump signed an executive order imposing tariffs on imports from Mexico, Canada, and China, sparking immediate retaliation from North American neighbours. Trump justified these measures by citing significant trade imbalances and the role of certain nations in enabling the inflow of fentanyl into the US. Despite his frequent criticism of India's trade policies, the country was exempt from the initial round of tariffs.
India contributes only 3.2% to the US trade deficit, ranking ninth among the highest contributors, compared to China’s 30.2%, Mexico’s 19%, and Canada’s 14%. The decision to exclude India reflects its relatively lower trade imbalance with the US and its ongoing efforts to enhance bilateral trade relations. The Ministry of External Affairs reaffirmed the strength of US-India ties, stating that both nations remain in close communication to address trade-related concerns.
In recent months, India has introduced policy changes to ease trade tensions and encourage foreign investment. The Union Budget 2025 reduced customs duties on imported motorcycles, cutting tariffs on bikes under 1600cc from 50% to 40%, with even larger reductions for motorcycles over 1600cc. This move benefits American manufacturers like Harley-Davidson, a company previously impacted by high tariffs. Additionally, India has taken steps to promote private investment in the nuclear sector, further signalling its commitment to expanding economic cooperation with the US.
India’s broader trade policy aims to balance domestic economic priorities with global integration. The Economic Survey highlighted efforts to rationalize tariffs while maintaining compliance with WTO regulations. Although these measures showcase India’s intent to strengthen its trade partnership with the US, it remains uncertain whether they will be deemed sufficient in addressing broader trade concerns.
As the US moves forward with protectionist policies targeting its largest trade deficit contributors, India’s exemption from the latest tariffs suggests a positive trajectory in bilateral trade relations. However, continued diplomatic and economic engagement will be crucial in navigating future trade challenges.
