Can India retaliate against Trump's 50% tariffs?

US President Donald Trump’s decision to impose a sweeping 50% tariff on Indian goods took effect on August 27, throwing one of the world’s largest trade relationships into turmoil. For New Delhi, the move has created a dilemma: should India respond in kind, or pursue a more calculated strategy to safeguard its economic and geopolitical interests?

Instead of launching immediate retaliation, the Indian government has chosen a nuanced approach. Prime Minister Narendra Modi’s outreach to Beijing, alongside highly publicized images of him riding with Russian President Vladimir Putin during a security forum in Tianjin, was widely interpreted as a signal to Washington that India has other powerful partners.
On the home front, Modi has announced relief measures for exporters hit by the tariffs, with tax cuts and financial assistance in the pipeline to cushion the impact on vulnerable sectors.
Yet, the pressure is mounting. Trade talks with Washington have stalled, and the once robust relationship between the two countries is deteriorating under repeated warnings and sharp rhetoric from US officials.
The Economic Cost of Prolonged Tariffs
Economists warn that if the 50% tariffs persist, India could lose up to 0.8% of its GDP. Exports to the US—India’s single-largest trading partner—might shrink by $35 billion this financial year, threatening hundreds of thousands of jobs in labor-intensive industries like textiles, jewelry, leather, and handicrafts.
This blow comes at a time when India’s domestic economy is already under strain from slowing global demand and a fragile manufacturing sector. The stakes are particularly high because the US absorbs nearly three times more Indian exports than India imports from the United States, creating an imbalance that leaves Delhi more vulnerable in a prolonged standoff.
Retaliation or Restraint?
India has not been shy about retaliating in the past. In 2019, after Washington hiked tariffs on steel and aluminum, New Delhi slapped duties on 28 US products—including almonds and apples—sending a clear message.
But experts believe the calculus is different this time. Retaliation could easily escalate into a full-blown trade war, one that India can ill afford. The risk isn’t limited to goods. Analysts caution that the US might extend penalties to services, outsourcing, and digital trade—sectors that account for nearly 6% of India’s GDP.
Even more concerning is Washington’s threat to curb H-1B visas, a program through which Indian professionals dominate the US tech workforce. US Commerce Secretary Howard Lutnick has already hinted at reforms that could restrict these visas, signaling that economic tensions are bleeding into the broader geopolitical relationship.
The Road Ahead
With $86 billion worth of goods flowing annually from India to the United States, compared with just $30 billion in the other direction, New Delhi faces a lopsided battlefield. Escalating could hurt India more than Washington, but doing nothing risks signaling weakness.
For now, India appears to be buying time—seeking new allies, protecting its industries, and waiting to see whether the US will shift course. Whether Delhi ultimately chooses retaliation or restraint may hinge on how far Washington goes in weaponizing trade against India’s wider economic and strategic interests.