the staff of the Ridgewood blog
Washington DC, in a world where trade tensions are heating up faster than a summer in Delhi, India is choosing a cooler, more calculated path. Despite U.S. President Donald Trump’s recent move to slap a 26% tariff on imports from India, the Indian government has made it clear: there will be no retaliation.
Instead of joining the global tit-for-tat tariff war, New Delhi is keeping calm and talking trade. According to top government sources, India is banking on diplomacy — and a well-timed trade deal — to keep its economic interests protected.
Why India Isn’t Hitting Back
Indian officials say that Prime Minister Narendra Modi’s administration is exploring a clause in the tariff order that could exempt nations who show progress toward fairer trade terms. India, they argue, is already doing just that.
By entering early-stage trade talks with the U.S., India believes it has a strategic advantage over countries like China, Vietnam, and Indonesia, which have been slapped with even steeper tariffs. Officials familiar with the discussions (who remained unnamed due to the confidential nature of the talks) say that India sees the current situation as a diplomatic opportunity rather than a provocation.
What’s on the Negotiating Table?
In February, India and the U.S. agreed to finalize a trade agreement by autumn 2025. As part of the effort to sweeten the deal, India has already made several goodwill gestures:
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Lowered tariffs on luxury goods like high-end motorcycles and bourbon
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Removed a controversial digital services tax, a long-standing thorn for U.S. tech giants
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Signaled willingness to cut tariffs on up to $23 billion worth of American imports
The goal? Secure long-term trade benefits and maintain strong U.S.-India economic ties, even in the face of politically motivated tariffs.
What Could the Tariffs Cost India?
While India’s response is diplomatic, the impact of Trump’s tariffs could still sting. Analysts warn that the new duties could slow India’s GDP growth by 20 to 40 basis points this year, potentially affecting thousands of jobs.
The diamond export industry, in particular, is at risk — more than a third of its output heads to the U.S.. If the tariffs stay in place, this billion-dollar sector may take a hit.
Meanwhile, Taiwan Echoes India’s Calm Approach
India isn’t alone in refusing to escalate. Taiwan’s President Lai Ching-te also ruled out counter-tariffs, even after the U.S. imposed a whopping 32% duty on Taiwanese imports (excluding semiconductors).
Instead of retaliating, Taiwan plans to remove trade barriers and continue massive investments in the U.S., with TSMC — the world’s largest chipmaker — announcing an additional $100 billion investment.
What’s Next for U.S.-India Trade Relations?
India’s decision not to retaliate signals a strategic long game. With the global economy already feeling the tremors of trade tension, India is aiming for constructive engagement over confrontation.
Whether this approach pays off depends largely on the outcome of the 2025 trade deal negotiations, and whether the U.S. sees India’s restraint as a sign of goodwill — or weakness.
But for now, India is choosing to play the diplomat, not the disruptor.
Conclusion: Tariff Wars Are Heating Up — But India and Taiwan Stay Cool
As trade wars rage and global markets react, India and Taiwan’s restraint could prove to be a smart economic strategy. By keeping its doors open for negotiation — rather than slamming them shut with retaliatory duties — India is betting on long-term stability over short-term satisfaction.
So while others escalate, India waits, watches, and works the room. Because sometimes, the best comeback… is a deal.
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