The so-called 90-day tariff pause announced by the United States under President Trump has introduced a temporary calm but with no certainty that it will last. The US administration’s unpredictability, marked by abrupt reversals, such as the drastic reduction in tariffs on Chinese goods from over 145% to 30%—reciprocated by China with a cut to 10% on US imports—has underscored the volatility in global trade policymaking.
Regardless of what comes next, nations across the world are already recalibrating trade ties. Many, including India, have begun negotiating bilateral trade agreements with the US in response to this brief window of détente. For India, the US remains a vital trade partner, both as a buyer and a seller. It makes sense to pursue a deal. However, New Delhi must tread carefully.
Lessons from the Past: No Guarantees
History cautions against over-reliance on US trade commitments. The US has previously withdrawn from major international agreements, including the Trans-Pacific Partnership (TPP), the Paris Climate Agreement, and the Joint Comprehensive Plan of Action (Iran nuclear deal). Even after signing agreements, adherence has often been dictated by domestic political compulsions rather than long-term strategic commitments.
Hence, India must avoid capitulating to unreasonable demands for the sake of short-term political optics. Instead, it should adopt a considered, strategic approach, similar to how the remaining TPP nations went on to form the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) without the US.
A Pause, Not a Reset
The Trump administration’s temporary reversal on tariffs is likely less about diplomacy and more about managing backlash—financial market jitters, Treasury bond volatility, and growing consumer discontent over rising prices. But this is not a reset. It is a holding pattern, a lull before potential further disruption in the global trade order.
What India Must Do Now
India’s trade surplus with the US is largely powered by exports of textiles, pharmaceuticals, engineering goods, gems and jewellery, and IT services. These sectors are vulnerable to tariff hikes. On the flip side, retaliatory actions could impact India’s imports of American capital goods and high-tech products, slowing down domestic manufacturing and R&D.
Moreover, Indian tariffs and non-tariff barriers remain among the highest globally. While these exist to protect domestic industries, several internal inefficiencies, such as high logistics costs, regulatory bottlenecks, and elevated input costs, make Indian goods uncompetitive.
Addressing these hurdles, while simultaneously pushing the industries toward global quality standards, is critical. Additionally, Indian businesses often lack the Free Trade Agreement (FTA) advantages enjoyed by competitors in countries with preferential US access.
A Four-Pronged Strategy
India must use this 90-day reprieve to pursue a four-point strategy:
Engage in Strategic Diplomacy: Intensify efforts to de-escalate trade tensions with the US through focused dialogue and sector-specific outreach.
Diversify Export Markets: Reduce over-dependence on the US by expanding into new and under-tapped regions, including Latin America, Africa, Southeast Asia, and Central Asia.
Enhance Domestic Competitiveness: Improve the global competitiveness of vulnerable sectors through structural reforms, incentives for innovation, and logistical efficiency.
Pursue Alternative Trade Alliances: Accelerate FTAs with emerging partners and strengthen trade corridors like IMEC and the Indo-Pacific Economic Framework.
India has already made encouraging progress. The India-UK FTA and the India-EFTA Trade and Economic Partnership Agreement (TEPA) are positive milestones, though their implementation remains pending. It is crucial that India ensures swift ratification and operationalisation of these deals.
At the same time, India must assert the mutual benefits of US-India trade. American companies, especially in technology, aerospace, defence, and retail, have significantly profited from access to India’s large, young, and growing market.
Building Resilience Through Self-Reliance
India has rightly begun investing in alternatives to American imports in strategic sectors such as semiconductors, defence, and renewable energy. A case in point: the recently approved joint venture between HCL and Foxconn to establish a chip assembly and packaging unit in Uttar Pradesh under the Rs 76,000 crore India Semiconductor Mission. This move aligns with the broader Atmanirbhar Bharat strategy, which should now evolve into an export-orientated import substitution model.
Multinational firms are also rethinking their global footprints. Companies like Foxconn are expanding manufacturing operations in India, setting up facilities along the Yamuna Expressway, as they seek geopolitical stability amid global trade fragmentation. India must seize this moment to position itself as the preferred destination for global supply chain relocation by enhancing ease of doing business and fast-tracking infrastructure development.
Conclusion: Turning Uncertainty into Opportunity
India’s approach to the 90-day tariff pause must be proactive, not merely defensive. By leveraging this period to deepen trade relationships, fortify domestic industries, and amplify its voice in shaping the global economic order, India can transform uncertainty into strategic opportunity.
This is a moment to think long-term. With a blend of diplomatic agility, policy reforms, and global engagement, India can not only withstand any future protectionist shock but also emerge stronger and more resilient in the evolving world trade landscape.
Sanjay Mehta is Deputy Director General, IMC. Views are personal
