Amid tariff-for-tariff response from Canada, China, Mexico, India takes a cautious route in trade war

NEW DELHI: The ministry of external affairs on Friday addressed the tariff imposition threat from US President Donald Trump from April 2. The MEA said the country intended to "reduce tariff and non-tariff barriers" with the intention to "deepen India-US two-way trade".
Amid stern response from Canada, China and Mexica, who have imposed reciprocal tariffs on the States and have also filed a complaint with the World Trade Organisation, India, in its cautious response said, "Our objective through the BTA is to strengthen and deepen India-US two-way trade across the goods and services sector, increase market access, reduce tariff and non-tariff barriers, and deepen supply chain integration between the two countries."
Trump has repeatedly said that India is a high-tariff nation and has expressed his intentions to pull off a tit-for-tat. "And the big one will be on April 2, when reciprocal tariffs, so if India or China, or any of the countries that really...India is a very high tariff nation," he said on Friday.
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The MEA response comes in amid reports of Trump administration pushing for India’s consent to eliminate tariffs on automobile imports as part of a proposed bilateral trade deal. However, India remains cautious about bringing the duties down to zero immediately, though it is open to considering potential reductions, sources told Reuters.
India imposes import duties of up to 110% on vehicles, a tariff Tesla CEO Elon Musk has criticized as one of the highest globally. The steep duties previously prompted the electric vehicle giant to shelve its plans to enter India's automobile market, the third-largest in the world.
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According to the think tank GTRI, emerging trade barriers present India with an opportunity to explore alternative sourcing options, particularly from Canada, where key commodities may now be more competitively priced.
Canada plays a vital role in supplying essential imports that align with India's high-demand sectors. Earlier in 2024, the US imported substantial volumes of crude petroleum oil ($103 billion), refined petroleum oil ($12.9 billion), and fertilizers ($3.1 billion) from Canada, highlighting its strong export capacity.
India’s own import needs are significant across key commodities, including crude oil ($140.3 billion), gold ($42.5 billion), copper ($2.8 billion), ethylene polymers ($2.2 billion), plastics ($1.3 billion), and fertilizers ($1.3 billion). With Canada already exporting copper cathodes ($1.3 billion), gold ($4.3 billion), ethylene polymers ($2.2 billion), and plastics ($2.1 billion), it could emerge as a key supplier for India's growing demand.
It noted that escalating trade tensions could work in India's favor by boosting exports and attracting greater American investments. Srivastava highlighted that during his first term, Trump scrapped NAFTA in favor of the USMCA in 2018-19, arguing that the older agreement was outdated and harmful to American workers.