Shift In US Trade Policy on Tariffs – Impact on the Indian Economy and the World

The Trump Administration 2.0 began with an ‘America First Trade Policy’. Mr. Trump has issued several Executive Orders and Proclamations since assuming his office on January 20, 2025. The significant among them is an increase in tariffs across the board by 10 per cent which is slated to increase to higher tariffs on some select 57 countries with which the US has major trade deficit in goods. Although the latter hike in tariffs is put on hold till July 8 2025, the actions by the US have created enough turmoil in international trade, with some countries imposing retaliatory tariffs, while other countries, including India, having chosen to negotiate a trade deal with the US. This article covers various aspects of tariffs by the US, the background and the impact of these measures on the Indian economy and the World.

INTRODUCTION

The recent tariff measures by the United States of America (“US”) have thrown much of the global trade in goods into disarray. The frequent changes to the policy, particularly the ‘tariff-on’ and ‘tariff-off’ policy, have made business planning difficult for companies, particularly those having exposure to the US. The threat of tariffs has made many countries rush to the US to secure trade deals to avoid punitive tariffs for their export goods. Businesses thrive when there is certainty in policy measur