India eyes US imports to dodge Trump’s tariff hammer

India is scrambling to protect its R2.35 trillion billion trade relationship with the US.

This comes after Donald Trump threatened a 25% tariff on Indian goods starting on Friday, 1 August, and a 10% levy on imports from BRICS countries.

With a growing trade surplus and ongoing ties to Russia, New Delhi is under pressure to rebalance trade by ramping up US imports and averting further fallout from Trump’s tough talk on tariffs.

Trump and Indian officials confirmed that the two are still negotiating on trade in attempts to avoid the tariffs.

The US president ten said that the world’s most populous democracy would be receiving an additional “penalty.”

In a post on his Truth Social platform, Trump said the unspecified penalty would be imposed on India starting 1 August for buying Russian oil and weapons “at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE”.

Indian Prime Minister Narendra Modi’s government is attempting to avert a blow to trade with its largest trading partner, with $129.2 billion (R2.35 trillion) in bilateral trade in 2024.

According to US trade data, India exported $87.4 billion (R1.59 trillion) of goods to the US in 2024, up nearly $4 billion from 2023.

The US president hates trade deficits, with official data saying that the US has a goods trade deficit with India of $45.7 billion (R831.65 billion) in 2024, a 5.4% annual increase.

It is unclear whether the 25% tariff includes a recent statement he made about BRICS member states.

This month, Trump also said that the US would “pretty soon” charge a 10% tariff on imports from BRICS countries.

The BRICS group is an economic bloc that expanded last year beyond Brazil, Russia, India, China and South Africa to include members such as Iran and Indonesia. 

Trump said cabinet meeting at the White House that “anybody that’s in BRICS is getting a 10% charge pretty soon … If they’re a member of BRICS, they’re going to have to pay a 10% tariff … and they won’t be a member long.”

“BRICS was set up to degenerate our dollar and take our dollar … take it off as the standard,” Trump claimed. “And that’s okay if they want to play that game, but I can play that game too.”

India’s response

Officials in New Delhi are reportedly eager to maintain progress in bilateral trade negotiations and are looking for ways to boost imports from their biggest trading partner.

India is reportedly considering ramping up its natural gas purchases from the US, and increase imports of communication equipment and gold to try narrow India’s trade surplus.

India’s Commerce Minister Piyush Goyal told Parliament on 31 July that the government is engaging with exporters to assess the impact of Trump’s tariffs.

“The implications of the recent developments are being examined,” Goyal said.

He added that his ministry is collecting feedback from exporters and industry groups, and will take “all necessary steps to secure and advance our national interest.”