Trump's 25% Tariff on India Won’t Stick but Costly Bargain in Store

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Economist Trinh says India can negotiate down Trump’s tariffs, but concessions may clash with domestic sensitivities on agriculture, oil, and autos

By S JHA

MUMBAI, July 30, 2025 — Economist Trinh Nguyen has weighed in on US President Donald Trump’s decision to impose a 25% tariff on all Indian imports, calling it “predictable,” yet warning that any negotiation to reduce the tariff may come at a steep cost for India — especially on politically sensitive sectors like agriculture, energy, and automobiles.

In a detailed analysis shared on X, Trinh said: “Trump’s 25% India tariff and Russian oil import punishment — is it a surprise? Not exactly. I’ve been thinking for a week what a US–India deal would look like. And I saw this coming.”

Negotiation Possible, But at What Price?

While Trinh believes that the 25% tariff is not final and can be negotiated down, she noted that India’s domestic compulsions will make it difficult for New Delhi to offer what Trump wants. “India can negotiate down from this threat… but how much lower and what are the costs,” she asked.

The US wants greater access to India’s agricultural market, particularly for soybeans, corn, and dairy, but Trinh noted that opening these sectors would be politically explosive in India: “India doesn’t want to upset its farmers — who represent about 40% of employment and voting power. That’s a red line.”

Oil, Autos, and the Russia Factor

Trinh added that Trump’s decision is not just about trade. It’s also about geopolitics — specifically, India’s continued purchase of discounted oil and military hardware from Russia, something Trump is keen to block as he campaigns to “starve Russia of oil revenue” amid the Ukraine war.

“Trump wants to use tariffs to punish India for buying Russian oil. But India will always buy the cheapest oil it can get. Russia is neither a friend nor a foe — just a supplier. That’s how emerging economies work,” she stated.

While India could theoretically pivot from Indonesian palm oil to US oil, Trinh noted, “there’s a reason India buys from Indonesia in the first place.” Strategic shifts like these aren’t easily done, especially when cost is the primary factor.

Auto Sector Access Is a Dead End

On autos, another key US interest, Trinh was blunt: “Trump’s going nowhere. India is not going to open its domestic auto market like Vietnam did. It has a massive internal market — that’s a prize on its own. But opening that market comes at a domestic political cost India doesn’t want to pay.”

She compared India’s gradual and controlled trade liberalization, citing the India-UK deal, where ultra-luxury segments saw liberalization but domestic auto and agriculture remained shielded.

The Bigger Question: Is It Worth It?

Trinh questioned whether it’s worth it for India to make sweeping concessions just to reduce the tariff to, say, 19% — the level offered to Indonesia or the Philippines. “If the best India can get is 15–19%, and that requires heavy concessions — is it worth it? Especially when India doesn’t export much to the US in the first place,” she wondered.

While India may be under pressure, Trinh believes Trump’s tariffs may still be more of a negotiating tactic than a permanent policy: “Trump has used threats like this before — with Japan, for instance — and then settled for lower numbers. This might be one of those moments. But it’s real enough that he posted about it.”