For both countries, it is about narrative, resilience, and positioning in an increasingly fractured global economic order.
New Delhi is once again at the centre of a high-stakes trade negotiation. As U.S. negotiator Brendan Lynch meets Indian officials led by Rajesh Agarwal, the shadow of a 50% tariff hike looms large. But while the tariffs have attracted global headlines, their impact on India and the motivations of the United States tell two very different stories.
This round of talks — the first major engagement since the Trump administration doubled down with penalty tariffs on Indian goods — carries a weight that goes beyond figures and trade balances. For both sides, it is about narrative, resilience, and positioning in an increasingly fractured global economic order.
The Stepwise Tariff Climb
The U.S. tariff increase on Indian exports did not happen all at once. Instead, it unfolded in steps, each justified with a different reasoning:
First step (August 7) — a 25% “reciprocal” tariff.
Second step (August 27) — another 25% “penalty” tariff, officially tied to India’s continued purchase of Russian oil.
Third step (now) — not a formal percentage hike, but the weight of uncertainty. The Delhi talks themselves are being shaped by these cumulative measuress
What began as a tactical pressure move by Washington has multiplied into a strategic dilemma: tariffs that were meant to hurt India are now exposing vulnerabilities within the U.S. itself.
India’s Resilience: Local Floors Steady
Contrary to the fears in some quarters, the tariff hikes have not destabilised the Indian economy. Yes, certain exporters — particularly in textiles, gems, jewellery, and leather — have felt the squeeze. Orders have been cancelled, and costs of entry into the U.S. market have risen.
But on the local floor, the Indian economy has absorbed the shock. In fact, some goods that would otherwise have been exported are now feeding domestic demand, raising the availability of high-quality products for Indian consumers. In other words, the tariffs have hurt niche businesses but have not shaken the broader foundations of Indian trade.
Moreover, India’s web of trading partners extends well beyond the United States. Europe, Southeast Asia, Africa, and the Middle East have all deepened ties with Indian producers in recent years. And millions of global Indians — citizens, residents, and diaspora networks — act as bridges for trade flows, reducing reliance on a single bilateral channel.
America’s Predicament: A Need for Negotiation
If India can afford patience, the United States cannot. Multiple sectors within the U.S. economy are feeling the strain:
Agriculture: American farmers have long sought access to India’s massive food market. Tariff barriers and local sensitivities around dairy and grain make this a recurring demand.
High-skill professionals: The U.S. remains reliant on Indian talent in science, technology, and medicine. Tariffs cannot disrupt that flow, but uncertainty in the overall trade relationship unsettles universities, companies, and investors.
Geopolitical optics: Washington does not want to appear isolated. By framing the tariffs as a response to “global” issues like Russian oil, the U.S. hopes to recast what looks like unilateral punishment as a defense of international order.
This is why the talks in Delhi are being described by Indian officials as “issue-discussions” rather than full negotiations. For Washington, however, they are a lifeline — an attempt to turn tariffs from confrontation into leverage.
The Russia Link: Convenient but Questioned
At the heart of U.S. rhetoric lies the claim that India’s oil trade with Russia justifies penalty tariffs. India rejects this outright. Its stance is clear: energy security is a sovereign matter, not a trade issue. Moreover, with Russia embroiled in conflict, the suggestion that Indian purchases undermine global stability rings hollow for New Delhi.
Many Indian commentators see the Russia argument as a political fig leaf. The real story, they argue, is America’s struggle to balance domestic needs with its global ambitions. By pointing at Russia, Washington avoids admitting that the tariff escalation is a blunt tool to extract concessions from India.
The Third Stage: A Turning Point
If the proverb “Onnil Pizhachal Moonu” holds true, the third stage is where the U.S. risks compounding its misstep. Tariffs that were supposed to pressurize India have instead emboldened it:
India’s production of professionals in science and technology continues unaffected. Tariffs cannot touch human capital.
Indian exporters are diversifying, and the local economy gains from goods redirected from the U.S. market.
Politically, India can frame itself as resilient and self-reliant in the face of Trump-era rudeness.
The U.S., meanwhile, risks alienating a strategic partner at a time when it seeks allies in an uncertain global landscape.
Globalisation vs Localisation
Perhaps the most revealing difference is how each side frames the situation:
India’s perspective: The tariffs are an American domestic problem. They impact a few businesses, but the nation as a whole is steady and even benefits in some respects.
America’s perspective: The tariffs are a global issue. They are packaged as part of defending international trade norms, even though their roots are in domestic politics and sectoral lobbies.
This tension — between India’s localised resilience and America’s globalised narrative — is what makes the Delhi talks more than just another round of bargaining.
What Comes Next
The Delhi meetings will not produce a grand trade deal overnight. At best, they may lower the temperature, open channels for sector-specific solutions, and set the stage for broader dialogue after the U.S. elections.
But one thing is clear: the stepwise tariff path has reached a crossroads. For the U.S., pushing further risks turning a tactical tool into a strategic loss. For India, the lesson is that resilience pays, and that the future of its trade policy lies in balancing local strength with global reach.
And as the proverb reminds us, one mistake, repeated, can multiply its costs. photo credit: varta.space/file
