Trump: ‘Modi, a Great Friend’; India Gets 26% Tariff

In a move that could redefine global trade relations, U.S. President Donald Trump has announced a sweeping wave of reciprocal tariffs on imports from 180 countries, including a 26% levy on Indian goods. While reaffirming his personal camaraderie with Indian Prime Minister Narendra Modi, Trump emphasized that India as a country has not been "treating us right," justifying the new trade barriers.

The announcement, made during a high-profile ‘Liberation Day’ event in the White House Rose Garden, marks a significant escalation in Trump’s ‘America First’ economic policy. Declaring April 2, 2025, as a landmark day in his drive to “Make America Wealthy Again,” the U.S. President defended his tariff spree as a necessary correction to decades of what he called economic exploitation by foreign nations.

‘A Great Friend, But…’

Trump, while speaking about India, struck a balance between his rapport with Modi and his grievance over trade imbalances. “Their Prime Minister just left,” Trump remarked, referring to Modi’s recent visit to Washington. “He is a great friend of mine, but I said to him, ‘You're a friend of mine, but you've not been treating us right.’ India charges us 52 per cent, so we will charge them half of that - 26 per cent.”

This move signals a significant shift in U.S.-India trade relations, which have remained largely cordial despite occasional disputes over tariffs, intellectual property rights, and market access. Under Trump’s previous term, Washington had removed India from the Generalized System of Preferences (GSP) program, citing unfair trade practices, and these new tariffs could further strain economic ties.

Global Trade Shake-Up: Key Tariffs Announced

The new policy extends far beyond India. Trump announced steep tariffs on several key trading partners, including:

• China: An effective 54% tariff, combining a fresh 34% levy on top of a pre-existing 20% duty.
• European Union: A 20% tariff, further intensifying U.S.-EU trade tensions.
• Japan: A 24% tariff, aimed at counterbalancing Japan’s automotive and electronics exports.
• Israel: A 17% tariff, a surprising move against a close ally.

The U.S. administration justifies these tariffs as a direct response to duties and non-tariff barriers imposed on American goods by foreign governments. “For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump declared in a fiery speech, adding that these new trade measures will revitalize American industry.

Stock Markets React Sharply

Financial markets reacted negatively to the announcement, with investors fearing disruptions in global trade flows. The after-hours trading session saw steep declines:

• Dow Jones Industrial Average: Futures dropped 1,007 points (2.3%).
• S&P 500: Fell 3.4% in extended trading.
• Nasdaq-100: Tumbled 4.2%.
• Tech stocks hit hard: Apple and Nike each fell by 7%, Nvidia declined by 4.5%, and Tesla shares dropped by 6%.
• Retail and consumer sectors: Companies reliant on imports faced severe losses, with Five Below down 15%, Dollar Tree falling 11%, and Gap dropping 8.5%.

This market turmoil underscores fears that Trump’s aggressive tariff stance could hurt multinational corporations and increase costs for American consumers, despite his administration’s claims that the measures will boost domestic manufacturing.

Strategic and Economic Implications

While Trump’s tariff doctrine is framed as an economic strategy, its geopolitical consequences cannot be ignored. India, which has been seeking to deepen its strategic partnership with the U.S. amid rising tensions with China, may find itself at a crossroads. The 26% tariff could push New Delhi to explore alternative trade alliances, possibly strengthening its ties with the European Union or diversifying supply chains to lessen dependence on the U.S. market.

For China, which already faces extensive tariffs, the fresh 34% hike is expected to further strain bilateral ties. Beijing may retaliate with additional duties on U.S. goods or intensify its push for trade agreements that exclude the United States, such as the Regional Comprehensive Economic Partnership (RCEP).

What’s Next?

The new tariffs are set to take effect in phases, with a 10% baseline tariff kicking in this Saturday and the higher penalties, including India’s 26% levy, coming into force on April 9. Businesses reliant on imports will have limited time to adjust, potentially leading to price hikes across sectors ranging from electronics to automobiles.

Meanwhile, as Trump faces growing criticism from multinational corporations and financial markets, the long-term impact of his trade war remains uncertain. While the White House argues that the tariffs will bring manufacturing back to American soil, critics warn that they could disrupt global supply chains, provoke retaliatory measures, and ultimately weaken the U.S. economy.

As India and other affected nations weigh their responses, Trump’s latest trade maneuver signals a return to the high-stakes economic brinkmanship that defined his previous presidency. Whether it will succeed in “Making America Wealthy Again” or backfire remains to be seen, but for now, global markets and diplomatic corridors are bracing for the aftershocks of ‘Liberation Day.’