US Threatens 100% Tariffs On India: Why Experts Warn Against One-Sided Trade Deal

Amid the US threat of 100% tariffs, experts urge India to stand firm, diversify export markets and strengthen trade ties to cushion the impact on exports.

The mood resonates in the Ministry of External Affairs which has clearly stated that India remains firmly committed to ensuring energy security for its 1.4 billion people.

Source : ABPLIVE AI

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Key points generated by AI, verified by newsroom

• New US law threatens 100% tariffs on Indian imports.
• India reaffirms energy security, vows to protect trade interests.
• Experts warn against unequal deals, fearing major export impact.

With a new US law opening door to 100 per cent tariffs on India, there is really little to trumpet about Delhi-Washington ties. The Trump signature on the Lindsey O. Graham “Sanctioning Russia and Iran Act of 2026” allowing the US administration to impose tariffs of up to 100 per cent on imports from the five largest foreign buyers of Russian crude oil and natural gas, puts India among others at direct risk, driving economists, a worried exporter community, industry and of course the Centre into cautious assessment as US-India talks or a bilateral trade agreement (BTA) advances.

Experts Against Trade-Off: India Warned Against Tariff Concessions

Among the various views on the behind- the-scenes calculations in the Trump administration, Global Trade Research Initiative (GTRI)’s Ajay Srivastva suggests that Washington may offer a lower tariff rate in exchange for an unequal bilateral trade agreement and reducing Russian oil purchases.

While the law runs its course to take effect within 30 days, the US Trade Representative will identify the countries to be targeted and recommend tariff rates.

“Although these countries would normally get 180 days to reduce Russian energy purchases or negotiate with Washington, President Trump may shorten the period and impose tariffs quickly to appeal to MAGA voters ahead of the midterm elections,” observes Srivastava.

The GTRI founder flags the possibility of Washington using the threat of 100 per cent tariff as a trade-off with a lower rate (say 18 per cent offered earlier on 6 February) in exchange for New Delhi sharply reducing Russian oil purchases and accepting concessions under an unequal bilateral trade agreement.

The sentiment in India is otherwise.

“We got to be very strategic in the sense that these tariffs, if imposed on India, can be used as a leverage to extract more concessions from us,” Biswajit Dhar, former professor at Jawaharlal Lal Nehru University, told ABP Live.

“It’s not that if you give in now, he is going to be less demanding later. The Government’s initial reaction what I quite liked is that we are not going to be cowed down like this. I think at one point we need to stand up and eventually if the US becomes too demanding, we need to find alternate markets,” Dhar advises.

Srivastava agrees that India should not trade its energy security for temporary tariff relief.

“Neither signing a trade agreement nor ending Russian oil purchases will protect India from future US action under Section 301, sectoral tariffs or other trade laws,” he notes.

India Reaffirms Energy Security Commitment Amid US Tariff Threat

The mood resonates in the Ministry of External Affairs which has clearly stated that India remains firmly committed to ensuring energy security for its 1.4 billion people.

The potential implications of the passage of the Sanctioning Russia and Iran Act for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side, according to the MEA.

“The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests,” says the MEA fine print. (See Fig 1)

That is no doubt reassuring for stakeholders but uncertainty and tension over a crippling fallout on India’s exports, is building up.

“Impact on Indian exports will become clear only after the US announces the rates, products covered and implementation schedule,” points out Srivastava.

"Any imposition of higher tariffs by the US, and the associated uncertainty, would cast a downside on Indian growth prospects," cautions Aditi Nayar, Chief Economist, ICRA.

President, Federation of Indian Export Organisation SC Ralhan is hoping that products already covered under Section 232 and other exempt categories remain outside any additional levy which will keep around 45 per cent of India's exports to the US unaffected.

“If high additional tariffs are eventually imposed on a broad range of Indian products, they could significantly affect competitiveness, particularly in labour-intensive and MSME sectors,” says Ralhan.

US Tariff Threat: Textile Industry Flags Export Risks

Chandrima Chatterjee Secretary General, Confederation of Indian Textile Industry (CITI), with high stakes in an impending trade deal with the US being actively negotiated, echoes the concern.

“As you may know we are under additional 10 per cent tariff for forced labour concerns under Section 301. While the US sees us a good market for cotton and few other inputs, we of course look at the US as a very big market for made-ups, towels. That is one of our biggest markets. For apparel, made-ups and towels, they are a big market for us. The supply chain players have also invested a lot in strengthening this. The industrial supply chain partners in both the countries are very keen that the trade not just continues but grows,” Chatterjee told ABP Live.

She however underlines the worrying disconnect between the trade deal push and US threat of fresh sanctions.

“It is confusing as to what exactly is the vision for the bilateral trade of these two countries. Even 50 per cent – if one recalls the earlier tariff imposition -- saw half the US market vanishing for us. It was said that at 50 per cent, it was almost an embargo. Now with 100 per cent, you cannot do trade where you are 100 per cent more expensive than any other competitor in that product.

“You are talking of products which are extremely cost competitive, say a $10, $15 shirt, many of which are in the mass consumption range which is a very cost competitive one,” says Chatterjee.

“So in which case it will only be a market for very niche products where the cost will not be a consideration. At present, a majority of the market is not that. So obviously, it will be a huge hit and all the industries are very concerned about it,” notes Chatterjee.

India’s Export Diversification

As a strategy to keep India’s trade upbeat against headwinds, Dhar bets high on opening up new geographical routes to market India’s products but there has been little action on this.

“Frankly I don’t think we have done enough. With Africa we have sub-optimal trade relations. We need to step that up. Then there is Central Asian countries which we need to start looking at seriously right now and diversify. The problem is that we are so reliant on the US market that Trump is doing whatever he wants. India has to be prepared for short term pains and then plan for the longer term,” Dhar told ABP Live.

Asked about India’s recent buoyant exports performance, Dhar flags concern over India’s narrow export basket.

“Only a small set of products are dominating the trade basket. With our kind of diversified production base, we can surely do much more,” he points out, agreeing that India is losing out on textile and clothing exports.

“There are a lot of issues including quality and also the inefficiency which has been built in because of inaction. We have not been looking after this industry properly. And mind you this is labour intensive. The Government has always consistently been saying that we want to promote labour intensive sectors but at the end of the day we are not promoting textiles and clothing. So that is one industry that comes to my mind immediately and which has the potential to deliver big dividends,” suggests Dhar. (See Fig 2)

The former professor also highlights agro processing sector exports.

“In this sector a lot of backend investments has to be done in terms of improving the product process quality. “Our processed food is not of international quality. So we need to invest there. There are others areas like pharmaceutical and a lot of small firms and companies which need scaling up. If they can ramp up their production, Indian pharma industry which has a global presence, can do much better than what we are doing now,” Dhar adds.

India Must Balance Russia, China And US Ties, Says ICRIER Professor

Arpita Mukherjee, Professor at Indian Council for Research on International Economic Relations (ICRIER) finds the Russian oil sanction as another disruption in the ongoing trade negotiations and suggests India carefully balance its relationship with Russia, China and the USA.

“It is important to show that the Russian oil purchases have some sign of declining trend. India may have to find ways to diversify import markets - which is not easy with the tensions in Hormuz,” Mukherjee tells ABP Live.

GTRI Warns Against One-Sided India-US Trade Deal

Describing the US bill as a “blunt and dangerous attempt to pressurize India to sign BTA on one sided terms,” Srivastava emphasizes that India’s purchase of Russian oil as a means to secure affordable energy for 1.4 billion people, not to finance war.

“These purchases have helped stabilise global supplies and prices. Tariffs of up to 100 per cent would punish Indian exporters and American consumers, disrupt trade and give the US president excessive power over major partners,” says the GTRI founder.

The overwhelming view seems to be that neither stopping Russian oil purchases nor signing a trade deal can shield India from future US action under Section 301, sectoral tariffs or other laws and that it would be in India’s interests to continue buying Russian oil while it remains commercially competitive, negotiate firmly and avoid unilateral concessions.