India unlikely to retaliate against Trump tariffs, focus on bilateral trade deal

India is unlikely to immediately retaliate against President Donald Trump’s tariff imposition, and is focusing efforts on negotiating a bilateral trade deal with the US to bring down duties, according to a Indian government official.

The South Asian country is seeking dialogue and not confrontation, the official said, adding that India has first mover advantage compared to rivals in the region. India plans to work toward a balanced and equitable trade deal with the US, the official said.

Negotiations

All options are up for negotiation, and both goods and services will be discussed, according to the official. The government is also in touch with exporters on the expected impact and will help if they reach out.

Trump last week announced a 26% tariff on US imports from India, dealing a blow to exporters and risking exacerbating a slowdown in an economy already suffering from weak consumer confidence. A lower negotiated rate could provide some relief, though escalating global trade tensions are still a threat.

During his visit to Washington after Trump’s return to the Oval Office, Prime Minister Narendra Modi and the US president agreed to negotiate a bilateral trade deal by the fall of this year.

The new tariffs are a setback for Modi’s government, which had already made several concessions to Trump on his trade and immigration agenda and indicated willingness to cut duties further on imports from America during a visit of US trade officials to New Delhi last month.

India’s restraint from immediate retaliation contrasts with its neighbor China, which decided to impose a 34% retaliatory tariff on all goods imported from the US.

The NSE Nifty 50 Index fared better than most Asian peers last week as the impact of the levies was deemed milder than that for other economies.