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.