Balancing trade

With the April 2 deadline ending today, the US is set to impose reciprocal tariffs, arguing that India’s 100 per cent duty on American agricultural goods is among the many unfair trade practices harming its economy. While New Delhi is expected to take a trade hit, its diplomatic manoeuvring signals a broader strategy. By proposing amendments to its nuclear liability law, India is looking beyond immediate trade friction to secure long-term economic and strategic gains.

President Trump’s aggressive tariff policy aims at enforcing reciprocity, a doctrine he has long championed. His latest move is being framed as a correction to perceived economic imbalances. However, India’s tariff structure is rooted in the need to protect its domestic industries and rural livelihoods. A sudden rollback without corresponding US market access could hurt Indian farmers and manufacturers. India exported goods worth $77 billion to the US in 2024, making it its largest export destination, while importing $55 billion worth of American goods, resulting in a trade surplus of $22 billion. The latest tariff retaliation, which could impact over $10 billion worth of Indian exports, is a sharp escalation in trade tensions.

Yet, while India resists trade concessions, it appears more willing to accommodate US interests in another critical domain — nuclear energy. The Modi government’s plans to amend the Civil Liability for Nuclear Damages Act mark a significant shift from its earlier stance. If the changes align with US expectations, they could revive stalled nuclear deals with US energy group Westinghouse, unlocking $20 billion in investments. France’s EDF, too, stands to benefit, making this a move of geopolitical and economic significance. India’s strategy is clear: absorb the trade shock in the short term but widen the field by offering nuclear incentives.

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