India Opts for Dialogue Over Retaliation on Trump-Era Tariffs

India has decided not to retaliate against U.S. President Donald Trump’s newly announced 26% tariffs on Indian imports, according to a senior government official cited by Reuters. The decision comes amid ongoing negotiations for a trade agreement between the two countries.

The official, speaking on condition of anonymity due to the confidential nature of the talks, noted that Prime Minister Narendra Modi’s government is closely examining a provision in Trump’s tariff order. The clause allows exemptions for countries that take “significant steps to remedy non-reciprocal trade arrangements,” potentially offering India a path to avoid the punitive duties.

India sees strategic value in being one of the first Asian nations to initiate discussions with Washington, placing it ahead of regional peers like China, Vietnam, and Indonesia—nations more heavily impacted by the increased U.S. tariffs, said a second government official, also unnamed.

No Counter Tariffs for Now

India joins countries such as Taiwan and Indonesia in holding off on imposing countermeasures. This restraint stands in contrast to the European Commission, which is preparing its own set of retaliatory tariffs following China’s recent response to U.S. trade moves.

India and the U.S. agreed in February to work toward finalizing an early trade deal by autumn 2025. In a bid to de-escalate tensions, India has already made several trade concessions, including slashing tariffs on luxury motorcycles and bourbon whiskey, and eliminating the digital services tax that previously affected American tech companies.

Economic Concerns Remain

Despite the diplomatic restraint, economists warn the U.S. tariffs could weigh on India’s economy. Projections suggest a potential hit of 20–40 basis points to GDP growth this fiscal year. The diamond industry, which exports over a third of its output to the U.S., could be especially vulnerable, with thousands of jobs at stake.

The Prime Minister’s Office has not yet responded to media queries regarding the government’s official stance.