Donald Trump declared 2 April as ‘Liberation Day’, fear of trade war; know what will be the impact on India?

New Delhi. US President Donald Trump has declared 2 April 2025 as ‘Liberation Day’. From tomorrow he is going to impose new tariffs on goods imported from various countries. Trump has termed it a historic step for America, aimed at freeing the country from dependence on foreign goods and strengthening the US economy. This announcement has created widespread discussion and uncertainty among global trade, markets and consumers, including India. This is expected to further deepen the already ongoing trade war between the US and its trading partners. Let us know what can be expected from this ‘Liberation Day’ of Trump.

What is ‘Liberation Day’ – the plan and purpose of the tariff

Trump has termed April 2 as “Liberation Day” and said that his new tariff policy will free America from dependence on foreign goods. According to him, these duties will be equal to the taxes that other countries impose on American products. However, many questions still remain on how this policy will be implemented. Trump believes that this move will correct America’s trade imbalance and respond to countries that impose heavy tariffs on American goods. Trump wrote on his social media platform Truth Social, “For decades we have been robbed by every country in the world, both friend and foe. Now it is time for America to take back its money and respect.”

In addition, the Trump administration has indicated that these tariffs will focus on countries that have large trade surpluses with the US, such as China, the European Union, Mexico, Vietnam, Japan and India. Treasury Secretary Scott Bessant said last week that these tariffs would target the “Dirty 15” countries, which contribute the most to the US trade deficit.

Which products will be subject to tariffs?
According to White House spokeswoman Caroline Levitt, Trump will present a plan to impose tariffs on almost all trading partners on Wednesday. The nature of this tariff is still unclear. Specifically, tariffs may be imposed on goods imported from countries such as the European Union, South Korea, Brazil and India. Trump has already announced a 25% tariff on automobiles and auto parts, which was part of an executive order signed on March 26. In addition, according to sources, tariffs may also be imposed on industries such as oil and gas, agricultural products, and possibly pharmaceuticals and semiconductors. Specifically, Trump has threatened a 25% tariff on countries buying oil and gas from Venezuela. However, Trump has indicated in recent days that he may exempt some countries. Speaking to reporters at the White House on Monday, he said, “I can give relief to many countries, and maybe we can take an even softer stance.” This could mean that the scope of tariffs is limited compared to before.

Impact on business and economy
Economists say that this move may provide some relief to American industries, but it will have a direct impact on consumers, as imported goods will become expensive. The production cost of many companies will increase, which may disrupt the global supply chain. White House trade advisor Peter Navarro said that these tariffs could give the US an additional revenue of $ 600 billion annually. This figure reflects an average tariff rate of 20%.

What tariffs have already been imposed?

China: 10% duty imposed from February 4, increased to 20% from March 4.

Steel and aluminum: 25% duty from March 12.

Automobiles: 25% duty to be imposed from April 4.

Imports from Venezuela: 25% additional tariff from April 2.

Fear of retaliatory action
Many countries are taking retaliatory measures against Trump’s tariff policy. China has increased tariffs on US coal, liquefied natural gas (LNG) and crude oil. Canada has imposed billions of dollars worth of retaliatory duties on US products. The European Union had also announced tariffs on items such as US beef, poultry, bourbon, motorcycles and jeans, although this has been postponed till mid-April.

What will be the impact on India?
For countries like India, these tariffs can impact exports. India exports a lot of products like furniture, electronics, and textiles to the US. If tariffs are imposed on India, Indian companies may suffer losses. On the other hand, some experts believe that Trump’s talk of ‘flexibility’ may provide relief to friendly countries like India. At the same time, China’s Foreign Ministry spokesman Guo Jiakun said, “There is no winner in a trade war or tariff war. The prosperity of any country does not come from imposing tariffs.” This statement reflects global criticism of Trump’s move.

Negative impact on India
Reduction in exports: India is a major exporter of products like textiles, furniture, auto parts, electronics, and pharmaceuticals to the US. If tariffs are imposed on these, these products will become expensive in the US market, which may reduce demand and cause losses to Indian exporters.

Example: In 2023, India exported goods worth about $83 billion to the US. Tariffs may reduce this figure.

Pharmaceutical industry: India is a major supplier of generic drugs, which are used extensively in the US. Imposition of tariffs could lead to higher prices of medicines, which could affect the competitiveness of Indian companies.

Textiles and jewelry: Products such as clothing, shoes, and diamonds exported from India could become more expensive, causing US buyers to turn to other countries.

Economic impact: A reduction in exports could impact India’s economy, especially small and medium enterprises that depend on the US market. It could also put pressure on employment and foreign exchange reserves.

Risk of retaliation: If India is hit with heavy tariffs, the Indian government could also impose retaliatory tariffs on US products (such as almonds, apples, and motorcycles), which could escalate trade tensions between the two countries.

Potential positives
Possibility of exemptions: Trump has said he may give tariff relief to some countries. Given the strong strategic ties between India and the US (such as the Quad and defence cooperation), India may get a partial or full exemption. This may limit the damage.

Manufacturing opportunity: If US companies want to increase local production to reduce dependence on imports, India can become an attractive destination. ‘Make in India’ can get a boost, especially in sectors such as automobiles and electronics.

Competitive advantage over China: If China is hit with heavy tariffs (which is likely), India may replace it in the US market in some sectors, such as low-cost electronics and clothing.

Uncertainties for India
Scope of tariffs: It is not yet clear whether India is among the “dirty 15” countries on which the Trump administration plans to impose tariffs. India’s trade surplus with the US was about $30 billion in 2023, which is less than that of China ($400 billion). This may reduce the possibility of India being targeted.

Political equation: Trump and Indian Prime Minister Narendra Modi have had a good relationship. If Trump sees India as a friendly country, the impact of tariffs may be minimal.

Negotiations continue between India and America
Meanwhile, India and the US have decided to hold talks focused on sectors under the proposed bilateral trade agreement (BTA) in the coming weeks. The Commerce Ministry gave this information on Saturday. This decision was taken after four days of talks between senior officials of India and the US. These talks ended here on Saturday.

A team of US officials led by US Assistant Trade Representative for South and West Asia Brandon Lynch was on a visit to India for talks. These talks between the two countries have taken place against the backdrop of the US threatening to impose retaliatory customs duties on its major trading partners, including India, on April 2. The Commerce Ministry said, “Engagement at the level of sector experts under the BTA will begin online in the coming weeks and pave the way for the initial round of talks in person.”

The two sides held four days of discussions here to realise the shared objective of promoting growth that ensures equity, national security and job creation, the ministry said. During these discussions, the two sides exchanged views on deepening bilateral cooperation in priority areas, including enhancing market access, reducing tariff and non-tariff barriers and deepening supply chain integration in a mutually beneficial manner.