E-Paper
How US tariffs sparked India’s agricultural diversification
This article is authored by Gunwant Singh, scholar, international relations and security studies, Jawaharlal Nehru University, New Delhi.
The re-imposition and escalation of US tariffs over the past decade, from the Trump administration’s 2018 steel and aluminium duties to newer tariff actions in 2025, have produced ripple effects across global markets, reaching far beyond metal-intensive sectors. India’s agricultural economy, which exported roughly $ 48–52 billion worth of farm goods in recent years and contributed about 11% of merchandise exports in 2023–24, is intertwined with these shifts. Agriculture in India is a heterogeneous landscape, ranging from bulk commodity exporters such as rice, sugar, tea and spices to high-value horticulture and processed foods. Any tariff shock emanating from the US, one of the world’s largest consumer markets, alters prices, supply chains and expectations, making it important to assess how these policies translate into economic effects at home and whether any inadvertent positive outcomes have emerged for India or other affected countries.
When tariffs raise the effective cost of Indian agricultural or agro-linked imports into the US, exporters face immediate pressure: reduced market access, thinner margins and a likely fall in farmgate prices in commodities that are tightly linked to global demand. Moreover, tariffs seldom stay neatly confined to the sectors they target. When the US imposed duties on steel and aluminium in 2018, India responded by raising tariffs on several American agricultural products, including almonds, walnuts, apples and pulses. This retaliatory cycle illustrates how agriculture becomes collateral in trade disputes, and how tariff cycles can reshape demand, with buyers pivoting to other international suppliers. Such shifts have material consequences for Indian farmers and agribusinesses who depend on export-linked price stability.
The economic impact on India’s agricultural sector manifests along multiple channels. First, there is the direct revenue effect: a contraction in exports to the US reduces foreign exchange earnings and affects price realisation for farmers. Second, input costs rise when tariffs are placed on upstream goods such as metals, machinery or chemicals, since agriculture today relies heavily on cold chains, irrigation equipment, packaging technology and food-processing machinery. Third, the persistent threat of tariff escalation generates policy uncertainty. Firms become more cautious with investments in logistics, warehousing and compliance systems, all of which are crucial for enhancing India’s agricultural competitiveness. Fourth, tariffs alter political bargaining spaces. The US stance can push India to adopt more defensive trade policies, while also limiting the scope for mutual concessions in areas like sanitary and phytosanitary rules or biotechnology approvals that could, over time, improve productivity.
Yet tariffs also create second-order opportunities through trade diversion. When the US restricts imports from certain suppliers, global buyers often reorient purchases toward alternative countries. In several product categories, this has worked in India’s favour. For example, during periods when US tariffs made certain Chinese or Southeast Asian goods costlier, Indian exporters saw a rise in shipments of processed foods, spices, and certain horticultural products. These gains, however, are often narrow, temporary and contingent on geopolitical shifts. A country that benefits from diversion in one commodity may lose out in another, and the same importing market may later readjust its sourcing patterns once tariff uncertainties stabilise.
Nevertheless, India does have meaningful alternatives to mitigate risks from US tariff exposure. The first is the diversification of both markets and products. India has increased agricultural exports to West Asia, Africa, Asean and the EU, reducing dependence on any single trade partner. Diversifying toward higher-value processed food exports rather than raw commodity shipments also buffers producers against tariff volatility, since value-added products often command stable demand. The second alternative is upgrading: Improving quality standards, investing in cold-chain infrastructure, adopting traceability technologies and aligning with global sanitary and phytosanitary benchmarks. Such investments make Indian exports more resilient because they allow competition on quality rather than price alone. The third alternative lies in diplomacy. India has used bilateral dialogues, WTO dispute mechanisms and targeted negotiations to seek tariff relief and push for predictable market access. Building credible, long-term trade frameworks helps reduce uncertainty for exporters.
The broader question, whether US tariff actions have created “reverse good outcomes” for other countries, including India, has a nuanced answer. In certain cases, yes. Countries not targeted by US measures have acquired temporary market share, improved visibility in global supply chains, and, in some cases, built new export relationships that outlast the tariff cycle. India’s expansion in select agricultural segments during recent tariff rounds suggests that geopolitical disruptions can indeed open doors. However, such gains are usually uneven and fragile. They often depend on the ability of exporters to quickly mobilise logistics and maintain consistent quality, and they can be erased if previous suppliers regain competitiveness or if the US shifts its tariff stance again.
India’s overall welfare effect, therefore, is mixed. While some exporters benefit from global realignments, the systemic costs of a volatile trade environment, including higher input prices and delayed investment, weigh heavily. The country must also navigate the political aspect of tariff conflicts, which can distort domestic policymaking and divert attention from much-needed reforms in agricultural marketing, value addition and infrastructure.
In conclusion, US tariff actions reshape global trade in ways that extend deep into India’s agricultural economy. The immediate consequences are visible in lost market access and rising costs, but the longer-term effects are felt in how firms calculate risks and invest in the future. For India, the most effective response is not defensive retaliation but strategic resilience: Diversifying markets, upgrading quality systems, and engaging diplomatically to secure stable access. Tariff shocks will likely remain a recurring feature of global trade. India’s challenge and opportunity lies in transforming these disruptions into catalysts for strengthening the agricultural value chain so that Indian produce remains competitive regardless of policy headwinds abroad.
This article is authored by Gunwant Singh, scholar, international relations and security studies, Jawaharlal Nehru University, New Delhi.
