India is carefully reviewing its response to US President Donald Trump’s proposed 26% tariff. During his ‘Liberation Day’ speech, Trump criticized India’s trade policies. As a result, tensions could rise between the two nations. However, Indian officials remain confident. They argue that while the proposal is serious, it is not a major setback.

India Maintains Composure Despite Tariff Threat

During his speech, Trump held up a chart, claiming that India imposes a 52% tariff on US exports. He expressed frustration, saying, “India, very, very tough. Very, very tough. The Prime Minister just left. He’s a great friend of mine, but I said, ‘You’re a friend of mine, but you’re not treating us right.’” Furthermore, he argued that the US has charged “almost nothing” on Indian goods for years, while India has heavily taxed American products.

Meanwhile, a senior Indian official confirmed that the Commerce Ministry is assessing the impact of the proposal. Speaking to Times of India, the official stated, “It is a mixed bag and not a setback for India.” In addition, he emphasized that trade negotiations with the US are ongoing. Both sides hope to finalize a deal by September or October.

Trade Experts Challenge Trump’s Claims

Although Trump’s statement attracted global attention, analysts question the accuracy of his numbers. In reality, India imposes an average tariff of 7.7% on US imports, while the US applies a 2.8% duty on Indian goods. This results in a 4.9% gap—far lower than Trump’s 52% claim. According to a JM Financial report, Trump likely included non-tariff barriers and peak duties in his calculations instead of actual rates.

Industries That Could Face Challenges

If the US enforces the 26% tariff, several Indian industries will suffer. For instance, telecom equipment, which accounts for 20% of Indian exports to the US, will be significantly impacted. Additionally, drug formulations (10%), jewellery (16%), and garments (10%) will face higher costs. Since these sectors contribute to more than half of India’s $77 billion exports to the US, the consequences could be severe.

For now, India is carefully considering its response. While trade negotiations continue, officials remain hopeful that a balanced agreement can be reached.