Can India still negotiate a trade deal with the US? Here’s what leaders and experts say

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Rahul’s post on X reads, “THE INDIAN ECONOMY IS DEAD. Modi killed it. 1. Adani-Modi partnership 2. Demonetisation and a flawed GST 3. Failed “Assemble in India” 4. MSMEs wiped out 5. Farmers crushed Modi has destroyed the future of India’s youth because there are no jobs.”

Reacting to Trump’s ‘dead’ Indian economy remark, Rahul Gandhi said, “Yes, he is right. Everybody knows this except the Prime Minister and the Finance Minister. Everybody knows that the Indian economy is a dead economy. I am glad that President Trump has stated a fact… The entire world knows that the Indian economy is a dead economy. BJP has finished the economy to help Adani…”

“PM Modi works only for one person and that is Adani. This (India-US trade) deal will take place, and PM Modi will do exactly what Trump says. The main issue in front of India today is that the government has destroyed our economic, defence and foreign policy,” he adds slamming the BJP-led centre government.

Linking trump tariff to his India-Pakistan ceasefire claims, Rahul further added, “The main question is, Trump has claimed 30-32 times that he did a ceasefire. He also said that 5 Indian jets have fallen. Trump now says that he will impose 25% tariffs. Why is PM Modi not able to give an answer? What is the actual reason? Who has the control?”

Trump’s 25% India tariff will impact American business too

AAP Rajya Sabha MP Ashok Kumar Mittal, chancellor of Lovely Professional University, said, “The latest tariff hike by United States raises doubts about the credibility and consistency of Donald Trump’s trade policy. There are two key things to understand here. Firstly, while a 25% tariff hike will definitely impact certain core sectors in India, but they will equally impact American businesses too! India is the world’s 4th largest economy and is all set to become the 3rd largest. Any disruption in Indo-US trade will impact both nations not India alone. Secondly, if USA thinks that by hiking tariffs, they will be able to coerce India into submission, then they are highly mistaken. India has not bowed to any external pressure in the past, and won’t do so even now. No country in the world can dictate to India as to who it should engage with on critical matters of trade, defence, or energy.”

Reacting to Donald Trump’s 25% tariff and penalty on Indian imports, Congress MP Shashi Tharoor called it a “very serious matter.” He suggested it could be a pressure tactic amid ongoing trade talks. Tharoor emphasised the importance of the US market, noting Indian exports worth nearly $90 billion. However, he asserted that if Washington’s demands were unreasonable, Indian negotiators had every right to push back and protect national interests.

Tharoor decodes Trump tariff

Tharoorsaid, “America is a big market for us. I think only the exports are around $87-90 billion. If their demands are totally unreasonable then our negotiators have all the rights to resist. 25% tariff plus an unspecified penalty for our buying oil and gas from Russia, it could take it up to 35-45%. There’s even talk of a 100% penalty, which will destroy our trade with America… The trade negotiations are still going on, and there is a possibility that this may come down. If it doesn’t, it will damage our exports, because America is a very big market for us… On the other hand, if their demands are completely unreasonable, our negotiators have every right to resist… America has to understand our needs as well. Our tariffs on America are not that unreasonable. It’s about 17% average. American goods are not priced competitively enough to sell in the Indian market…”

He further adds, “Tharoor says, “It is a challenging negotiation. We are negotiating with many countries. The US is not the only negotiation. We have ongoing negotiations with the EU, we already concluded a deal with the UK, and we are talking with other countries also. If we can’t compete in America, we may have to diversify our markets outside of America. We are not out of options. If America is completely unreasonable with its demands, we have to move elsewhere. That is the strength of India; we are not a totally export-dependent economy like China. We have a good and strong domestic market. We must give strong support to our negotiators to find the best deal possible. If a good deal is not possible, we may have to walk away…”

For economist Trinh Nguyen, Trump’s tariff move is hardly surprising. In a detailed breakdown, Nguyen outlines the political motives, economic consequences, and the room India has to negotiate its way out of the situation.

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Why economist Nguyen see Trump’s 25% tariff coming?

“This is not final, but I saw it coming,” says Nguyen, referring to the tariff hike. She believes this is a calculated threat from Trump, reminiscent of his tactics with Japan during his previous term. “It’s a familiar playbook. Float a harsh number, generate leverage, then negotiate it down,” she explains.

According to Nguyen, even the European Union and Japan received only a partial reprieve, settling at 15% tariffs on key sectors like automobiles. “For India, 15% might be the best-case scenario, but even that won’t come cheap,” she warns.

Russian oil, a major discontent in India-US trade talk

One of the biggest points of contention, according to Nguyen, is India’s continued purchase of discounted Russian oil. “India is not trying to make a geopolitical statement. It’s just buying where it’s cheapest. But Trump wants to starve Russia of oil revenue. That’s where the clash begins,” she says.

Nguyen argues that forcing India to abandon Russian oil imports would not only raise domestic costs but also effectively impose a secondary sanction. “This tariff is also a punishment. India will now pay more both in direct penalties and through higher energy prices,” she adds.

Trump’s desire to portray the deal as a win for American exporters is another major hurdle. “He wants to boast that he opened India’s massive market. Auto exports are a big part of that narrative,” says Nguyen. But India’s gradual approach to liberalisation complicates the picture.

Referencing the India-UK trade agreement, Nguyen said that India is open to limited access in sectors it deems non-strategic, like ultra-luxury goods, but will fiercely guard its domestic auto industry. “India’s not ready to open up autos the way Trump wants. So that 25% tariff might just stick,” she remarks.

India’s agriculture sector tied to its rural vote bank

According to Nguyen, the US is also keen to push agricultural exports, particularly soybeans and corn. But here again, Nguyen sees limited room for compromise. “India won’t antagonise its farmers, who make up 40% of the electorate and workforce,” she says.

While a shift such as replacing Indonesian palm oil with US edible oil might be possible, Nguyen doubts Delhi would agree to anything significant. “Big-ticket purchases or investment packages are just not in India’s DNA, especially in sectors tied to rural votes,” she says.

Why Nguyen thinks an India-US trade deal is unlikely?

Nguyen emphasises that India is not Vietnam as it has a large domestic market that makes it less vulnerable to trade pressure. “But opening that market comes with political costs. India is cautious, especially with a low-risk appetite on reforms,” she explains.

However, as Trump’s August 1 deadline looms, Nguyen believes there is still space to negotiate. “This could settle somewhere between 19% and 21%, like the rates for Indonesia or the Philippines. But the question India must ask is at what cost?” she says, adding, “Trump is pushing India to move faster than it wants. Whether India bends or holds the line will define the future of US-India trade.”

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Meanwhile, the Indian government has responded with measured defiance, stating that national interest remains paramount. A Commerce Ministry spokesperson said, “We will protect our farmers, MSMEs, and entrepreneurs. Every trade agreement must be mutually beneficial.” Also, talks with the US remain ongoing on trade.

India can outgrow tariff loss quickly: Samir Arora of Helios Capital

In response to Donald Trump’s announcement of a 25% tariff on Indian imports, Samir Arora of Helios Capital posted on X. According to him, the impact of the tariff may be limited. He noted that India’s exports to the US amount to roughly 2% of its GDP. A 10% decline in those exports would result in just a 0.2% dip in GDP. With India’s economy growing at around 6% annually, it could make up the loss in about 12 days. Arora added that India could recover the loss from tariffs by working weekends for six weeks.

“India exports to USA are 2 pct odd of GDP. If they fall 10 pct, India loses 0.2 pct. Gdp growth is 6 pct odd. So to recover 0.2 pct should take 12 days. Can recover to pre tariff levels by working on Saturdays and Sundays for 6 weeks.Get on it, boys and gals,” reads Samir Arora’s post on X.