PM Modi to meet Trump amid looming tariff war, concessions talks on agenda

NEW DELHI: India and Thailand face potential risks from US President Donald Trump's proposed reciprocal tariffs, according to analyses from prominent financial institutions like Morgan Stanley and Nomura Holdings.
Prime Minister Narendra Modi is scheduled to visit the US on Wednesday and Thursday ahead of Trump’s anticipated announcement of reciprocal tariffs.
According to The Economic Times report, the government is considering additional tariff reductions before PM Modi meets US President Trump, potentially averting trade tensions by facilitating increased American exports to India.
The Washington DC visit is expected to focus on a limited trade agreement, potentially including specific tariff concessions and investment commitments.
Since 2021-22, the US has been India's primary trading partner, representing 18% of goods exports, over 6% of imports, and roughly 11% of bilateral trade. Trade disruption concerns arise from possible US duties. Principal Indian exports to the US comprise drug formulations and biologicals (10.28%), pearls, precious stones, and semiprecious stones (8.7%), and petroleum products (7.83%).
India and Thailand particularly stand out amongst Asian nations due to their higher tariffs on US exports compared to what they face from the US. Trump's specific policy details, including targeted countries and criteria, remain undefined.
Trump's administration is expected to announce its decision shortly. "Emerging Asian economies, including India and Thailand, impose higher relative tariff rates on US exports and are therefore at risk of higher reciprocal tariffs," Nomura analysts, led by Sonal Varma, stated in a note to clients. They anticipate increased negotiations between Asian economies and the Trump administration.
Trump announced reciprocal tariff plans on Friday, emphasising fair treatment for the US whilst dismissing universal tariffs. Further details are expected by Tuesday or Wednesday, with implementation possible immediately or shortly after.
Market uncertainty has increased due to Trump's trade policies. Asian officials face pressure to negotiate with Trump to protect their export-dependent economies from potential trade conflicts.
Bloomberg economists highlight India's vulnerability due to its significant tariff differential with the US, exceeding 10 percentage points according to Cousins' analysis.
Morgan Stanley's team, led by Chetan Ahya, suggested that India could enhance its US purchases in defence equipment, energy, and aircraft during negotiations.
The overall impact depends on Trump's policy specifics, including whether it targets national average tariffs, specific industries, products, or other factors.