Trump’s Tariff Trap: Lessons For India

THE TAKE 

India Is Walking The Tariff Tightrope, Hopefully With Lessons For The Future

US president Donald Trump’s pronouncements on tariffs so far may have sounded wild, arbitrary and inconsistent in recent months, but the 2025 National Trade Estimate (NTE) report, published by the US Trade Representative (USTR) on foreign trade barriers, is anything but that.

The just-out report lays out in exhaustive detail America’s concerns on a wide range of areas. The report covers both tariff and non-tariff barriers.

In some ways, the NTE report is a useful looking glass through which to see concerns of key trading partners and areas India can actually work upon in the context of that often-used term — ease of doing business.

For instance, the report stated that the US has placed India on the ‘Priority Watch List’ due to inconsistent progress on intellectual property (IP) concerns. It highlighted the lack of specific laws for “trade secret protection” as a significant issue, along with long waiting periods for patent grants.

Fixing these would arguably help Indian companies and patent seekers as well. The report also highlights items from data localisation norms to India’s regulations on the import of milk, pork, and fish products.

The report highlighted that these imports require genetically modified-free certificates without providing a scientific or risk-based justification.

Former government officials had told me earlier that India would not budge on genetically modified crops like in the case of soybean, because doing so would kick off a firestorm amongst India’s farmers within India.

And that would be only one of many firestorms the government has to grapple with, if it were to allow any duty cuts on agriculture and dairy products. Bottom line, it is extremely unlikely there will be tariff reductions here.

Forcing New Alignments 

The report pointed out that India’s average applied Most-Favoured-Nation (MFN) tariff rate is 17% overall, but rises to an average of 39% on agricultural products. There is an extensive list of issues, well compiled and documented and going back several years, for instance India’s price caps on essential medical devices such as coronary stents and knee implants, affecting what it says are US manufacturers’ profits and product availability.

Interestingly, the pricing of imported stents was an issue that Prime Minister Narendra Modi raised in an election rally in Uttar Pradesh in 2017. Yes, it goes that far back.

The government had reduced the prices of cardiac stents by up to 400% and capped them. Something that patients in India obviously welcomed. While all this would have figured prominently in the trade discussions in recent weeks, where it finally could land is not clear.

Particularly since India was called out again on its high agriculture tariffs by a US government spokesperson just yesterday.

Tariffs are forcing new alignments.

A Reuters report out yesterday quoted China saying China, South Korea and Japan will respond jointly to the US tariffs.

South Korea has already called the statement somewhat misleading, while Japan has denied the statement, though it admitted to the talks. The fact that such a three-way partnership is even being discussed conceptually is quite astounding.

India actually has two partners. That is the public sector or government and/or the private sector or business.

RS Subramanian, managing director of logistics giant DHL Express India, told me on The Core Report that he was impressed by the innate confidence of Indian businesses that they can manage tariffs and their impact.

And then there is the government that has been working furiously, including via visits by the prime minister and commerce minister to Washington DC, and multiple other official meets. Several steps have been taken to bring down or remove tariffs and duties, ranging from motorbikes and whiskey to an equalisation levy on digital advertising called the Google tax.

The US is obviously asking for much more, as is quite evident. The gap between what is being sought and what will be offered might be large. It might take effort to bridge this gap and possibly a steep price to be paid.

The good news is that India has made encouraging strides in responding to an external crisis of the likes we have not seen in a long time. Hopefully, this one lesson will stay with us as we go past April 2 into the next tariff crisis.

DECODE THE NEWS

Ola’s Scooter Sales Gap Raises Legal And Regulatory Heat

Ola Electric’s sales-registration mismatch is no longer just an accounting oddity—it’s a full-blown regulatory conundrum. While the company claimed it sold 25,000 electric scooters in February this year, VAHAN data shows just 8,689 registrations. That’s more than 16,000 scooters unaccounted for under India’s motor vehicle rules, which prohibit delivery without registration.

The implications are serious. If scooters weren’t delivered, Ola can’t legally recognise them as revenue. But if they were delivered without registration, that’s a compliance breach. Either way, the gap raises red flags about corporate disclosures, especially under SEBI rules for listed entities. And even though Ola is now clearing its backlog through in-house registration, March data shows it may be losing ground. Bajaj, TVS, and Ather all outpaced Ola’s fresh March registrations, suggesting a loss in market momentum.

With both the transport ministry and the Securities and Exchange Board of India circling in, Ola’s filing practices—and broader startup compliance norms—are now under the scanner. As legal experts told TheCore, the outcome could set a precedent for how aggressively India regulates sales claims and accounting disclosures in the run-up to several impending startup initial public offerings (IPOs).

—🚨 Tariff Plans. Speaking of India’s tariff preps, the Union Minister of State for Commerce and Industry Jitin Prasada told the Parliament that the country’s tariff policy was to achieve India’s economic growth and to regulate trade, protect domestic industries, and generate revenue. PTI reported the minister saying, “​​Recent reforms have focused on streamlining the tariff structure and facilitating trade.” Trump has been specifically critical of India’s high tariffs and recently said that he heard India will reduce tariffs “substantially”. India has been playing it safe with the US, trying to cut out the best deal it can, with Commerce Minister Piyush Goyal and Prime Minister Narendra Modi visiting the country 

—📉 Americans Spend Less. The outlook for US consumer spending is looking grim amid trade tensions triggered by tariff threats by president Trump. University of Michigan’s Survey of Consumers showed a drop in consumer sentiment by 11.9% from February and 28.2% from a year ago. This is the third straight drop for a month. Surveys of Consumers director Joanne Hsu said, “Consumers continue to worry about the potential for pain amid ongoing economic policy developments.”  Two-thirds of the consumers are expecting increased unemployment, the highest since 2009. 

—🧧 China’s Strategic Shift. In a strategic shift, China is offering to boost purchases of Indian goods, — just as Trump prepares to roll out reciprocal tariffs on countries including India and China this Wednesday. Bilateral trade between the neighbours stood at $101.7 billion in FY24, with India running a large deficit. India exported $16.6 billion worth of petroleum oil, iron ore, marine products, and vegetable oil to China, according to Bloomberg. The overture comes as Donald Trump prepares to roll out reciprocal tariffs this week, calling out both India and China for what he termed as ‘unfair trade practices’.

—📱 Digital Chaos! Banks across India faced transaction disruptions on Tuesday due to financial year-end processing issues, causing intermittent failures. The National Payments Corporation of India (NPCI) confirmed the issue, clarifying that the Unified Payment Interface (UPI) itself was operational, but certain banks faced technical difficulties. This marks the second outage in a week, following a major disruption on March 26. Platforms like Google Pay and PhonePe were affected, with complaints surging past 23,000. NPCI assured users that the issue was being resolved.

UGHH

Incoming: An Even More Boiling HOT Summer! 🥵🥵

This April will be even hotter than usual in most of the country, according to the director general of Meteorology at the Indian Meteorological Department, as reported by Reuters. In addition to making life hell for living beings, the above-average temperatures will also affect all sectors of the economy. There will be damage to agriculture, and in particular to wheat. As well, heat waves will increase our cooling requirements, pushing power demand higher than usual. Experts predict a 10% surge in peak power — from 250 GW last year to 275 GW this year — placing immense pressure on India’s energy infrastructure. 

Rising heat will also cause job losses and a reduction in productivity, since so many Indians work outdoors or in extreme conditions in sectors like agriculture, construction and manufacturing. Specifically, the World Bank projects that by 2030, out of the 80 million jobs lost, India will account for 34 million of those, caused by heat stress. In total, lost labour will cut 4.5% of the country’s GDP. 

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas