India To Expand U.S. Imports Amid Trade Imbalances, But Tariff Disputes Persist: Trump-Modi Meeting

New Delhi, Feb 15 (KNN) In a significant diplomatic meeting at the White House on Thursday, U.S. President Donald Trump and Indian Prime Minister Narendra Modi held talks focused on bilateral trade relations, with Trump announcing India's commitment to increase purchases of American oil, gas, and military hardware to address trade imbalances. 

However, Trump maintained that India would not be exempt from potential reciprocal tariffs.

The Global Trade Research Initiative (GTRI), a prominent economic think tank, released an analysis on Friday suggesting that the U.S. government's proposed reciprocal tariff strategy may have limited impact on India due to fundamental differences in the two nations' export profiles. 

GTRI Founder Ajay Srivastava highlighted that approximately 75 percent of U.S. exports to India already face tariffs of less than 5 percent, while India contends with significantly higher U.S. tariffs ranging from 15 percent to 35 percent on labor-intensive exports such as textiles, garments, and footwear.

The White House fact sheet dated February 13 emphasised the disparity in agricultural tariffs, noting that while the U.S. maintains an average applied Most Favored Nation (MFN) tariff of 5 percent on agricultural goods, India's corresponding rate stands at 39 percent. 

The document also pointed to specific examples, such as India's 100 percent tariff on U.S. motorcycles compared to the U.S.'s 2.4 percent tariff on Indian motorcycles.

Recent trade data underscores the significance of the bilateral relationship. During April-November 2024-25, the United States emerged as India's second-largest trading partner, with bilateral trade in goods reaching USD 82.52 billion, including USD 52.89 billion in exports and USD 29.63 billion in imports, resulting in a USD 23.26 billion trade surplus for India. 

This follows a robust performance in 2023-24, when bilateral trade reached USD 119.71 billion, with India maintaining a substantial trade surplus of USD 35.31 billion.

GTRI advises a measured approach, suggesting India wait for the U.S. decision on reciprocal tariffs expected in April before formulating its response, similar to its strategy in June 2019. 

The think tank also cautioned against pursuing a comprehensive free trade agreement at this time, citing concerns over the U.S. administration's adherence to existing trade agreements, as evidenced by its actions regarding the USMCA.

Looking ahead, key uncertainties remain regarding the implementation of reciprocal tariffs, particularly whether they will apply to specific products or entire sectors. 

This distinction carries significant implications for global trade dynamics, especially concerning China's position as the dominant supplier of industrial goods.

(KNN Bureau)