On 2 April, US President Donald Trump unleashed a seismic shift in global trade relations by imposing sweeping tariffs, sparking widespread economic concern and political consternation. The tariffs, broader and steeper than anticipated even by his staunchest corporate supporters, sent global markets into a tailspin. In the US alone, stocks plummeted by 10%, and fears of inflation prompted the Federal Reserve to reconsider any imminent interest rate cuts. Comparisons are already being drawn with the economic turmoil of the Great Depression in the 1930s.
While nations across the globe have expressed alarm and assert their right to respond, many have so far chosen the path of caution. China, however, has fired back with a bold reciprocal tariff regime, targeting American agricultural exports to strike at Trump’s political base in the farming heartlands. The EU, meanwhile, remains divided. Although the European Commission has called for retaliatory measures, major players like France and Germany, embroiled in domestic turbulence, have opted for negotiation over escalation.
Canada and Mexico, already impacted by earlier steel and aluminium tariffs, were conspicuously exempted from the latest 10% blanket tariff. Their reprieve is likely down to the complexities of the US-Mexico-Canada Agreement (USMCA), which tightly integrates the three economies through supply chains that would be difficult to disentangle without causing mutual harm.
Singapore’s Prime Minister declared the current global trade order “dead”, warning that smaller nations may be forced into weaker bilateral negotiations, in place of the multilateral frameworks that have defined global trade since 1945.
At the heart of Trump’s move is a desire to upend a global trade structure that, in his administration’s view, has favoured China excessively. For years, Beijing has been accused of exploiting World Trade Organization provisions—offering heavy subsidies and enforcing forced technology transfers—which has resulted in China capturing 32% of global manufacturing output. The Trump administration sees this as unfair and destabilising.
Despite global disapproval, domestic opposition in the US remains muted. Trump’s core base remains loyal, and Republicans retain control of both chambers of Congress. The usual checks and balances of American governance appear diminished, with right-wing ideologues wielding disproportionate influence. The recent dismissal of key security officials, reportedly under pressure from hardliners like Laura Loomer, underscores this trend.
India, meanwhile, must approach this turbulent landscape with strategic foresight. The US is India’s largest trading partner, with bilateral trade exceeding $200 billion and a favourable surplus of $45 billion. In the past, countries such as South Korea, Japan and Germany experienced export-driven growth by gaining extensive access to the American market. That avenue now seems increasingly narrow.
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However, opportunity often lurks amid disruption. Indian products currently face 26% US tariffs, whereas Chinese goods are being hit with a hefty 54%, and Vietnamese with 46%. This opens a competitive window for India. Following a high-level meeting between the Indian Prime Minister and President Trump in February, both sides agreed to work towards a comprehensive trade agreement, with an initial phase expected by autumn. Talks have since begun, with Indian and American trade officials engaging in detailed negotiations.
In parallel, technological cooperation continues to deepen. The Indo-US iCET (Initiative on Critical and Emerging Technologies), launched during the Biden era, aimed to foster collaboration in AI, quantum computing, biotech, and defence. Surprisingly, the Trump administration has not scrapped this initiative but rebranded it as ‘TRUST’—Transforming the Relationship Using Strategic Technologies. This signals continuity in technological alignment and provides scope for India to leverage its digital and scientific strengths.
Amidst the upheaval, the US remains determined to maintain its status as the world’s pre-eminent economic and technological force. With China identified as the principal rival, India’s demographic and tech prowess make it a critical strategic partner. If Delhi plays its cards right, this turbulent chapter in global trade could mark the beginning of a more influential and prosperous Indian role on the world stage.
