India rules out retaliation against Trump’s tariffs, focuses on trade talks

India has decided not to retaliate against U.S. President Donald Trump’s recent decision to impose a 26% tariff on imports from the country, as New Delhi seeks to preserve momentum in ongoing trade negotiations with Washington.

According to an Indian government official, who spoke on condition of anonymity due to the confidential nature of the discussions, the administration of Prime Minister Narendra Modi is instead exploring diplomatic avenues outlined in the tariff order itself. One clause in the U.S. order allows for exemptions if trading partners take “significant steps to remedy non-reciprocal trade arrangements,” Caliber.Az reports, citing Reuters.

India sees a strategic opportunity in being among the first Asian countries to initiate trade negotiations with the U.S. A second official noted that India may be better positioned than regional peers like China, Vietnam, and Indonesia, who have all faced increased tariffs without having entered substantive talks with Washington.

The White House’s tariff announcement has rattled global markets, prompting backlash and countermeasures from several economies. However, India, along with Taiwan and Indonesia, has ruled out immediate retaliatory duties. In contrast, the European Commission is preparing to impose counter-tariffs following China’s retaliatory actions.

In February, India and the U.S. committed to reaching an early trade agreement by autumn 2025 to resolve bilateral tariff disputes. While Modi’s office has not yet issued a formal comment on the latest tariff hike, Indian negotiators remain active behind the scenes.

Last month, Reuters reported that New Delhi is open to reducing tariffs on approximately $23 billion worth of U.S. imports. In a gesture aimed at improving ties, India has already taken steps such as cutting duties on high-end American motorcycles and bourbon whiskey, as well as scrapping a controversial digital services tax that affected major U.S. tech firms.

Despite these efforts, Trump’s tariffs could still deal a blow to India’s economy, potentially shaving off 20 to 40 basis points from GDP growth this fiscal year. Particularly vulnerable is the diamond industry, which sends over one-third of its exports to the U.S. and supports thousands of jobs.

India’s approach highlights its preference for diplomacy over confrontation, as it works to navigate a turbulent global trade environment and protect key sectors of its economy.

By Khagan Isayev