Can India turn US tariff threat into 'win-win bargain'? Arvind Panagariya says it can

NEW DELHI: India can turn the potential threat of reciprocal tariffs from the US into its favour if it can use the situation to negotiate mutual tariff reductions, said the chairman of the 16th finance commission Arvind Panagariya on Saturday.
"We have a very good opportunity to do a win-win bargain. So we can really turn it into a win-win situation. Now that the reciprocal tariff threat is coming, it is doubly beneficial that we also, in the process, hold the United States to reciprocal tariff reductions as well, and get access for our goods that we export to them," Panagariya said.
Speaking at the 49th Civil Accounts Day, Panagariya highlighted India's strong opportunity for a mutually beneficial agreement on reciprocal tariffs. "Our own (economic) liberalisation (in 1991) makes us more competitive, forces us to become more efficient and in that process, if we were to do a reciprocal tariff bargain, we can also get better access to the US market," he said.
"We can turn it (reciprocal tariffs) into a positive. If it ends up in a kind of tariff war in which the US hits us with tariffs and we hit back on the US with tariffs, that outcome will be kind of unfortunate. That will not be to the advantage of either side," he added.
US President Donald Trump has repeatedly said that America will impose reciprocal tariffs on India, accusing the country of being a "tariff king" and a "tariff abuser." The US has already announced a 25% tariff on steel and aluminum, set to take effect on March 12, impacting Indian exports of these goods.
In 2023, US-India bilateral trade in goods and services reached $190.08 billion, comprising $123.89 billion in goods and $66.19 billion in services. India's merchandise exports to the US totaled $83.77 billion, while imports stood at $40.12 billion, resulting in a trade surplus of $43.65 billion for India. Additionally, India's services exports to the US amounted to $36.33 billion, with imports totaling $29.86 billion.