India’s lessons from America’s trade tempest

This article is authored by Sriparna Pathak.

Globalisation and interdependence were once thought of as ways to avoid conflicts between States in the international order. The assumption was that as countries trade more, the impetus to get into political or military conflicts would reduce, as states would think of the mutual economic reliance they have. However, as exemplified by the two most powerful States of the current rules-based international order- the US and China, economic reliance has just created more opportunities for states to unleash conflicts on others, while prioritising their own national interests. The US’s aggressive and ill-placed tariff regime under Trump 2.0 is a cautionary tale for countries of the Global South like India, where agriculture is not just an economic pillar, but the lifeline for over 45% of the workforce. US tariffs, ranging from a baseline 10% on all imports to punitive 50% hikes on global hikes on goods from partners like India, have led to a cascade of disruptions in global agricultural markets. Even a small country like Togo has not been spared by Trump 2.0’s US, as it faces a 10% tariff.

Donald Trump(AP)

While this is the case for the US, China, the world's second-largest economy, in 2025, imposed a five-year tariff on Indian pesticides, specifically cypermethrin, ranging from 48.4% to a maximum of 166.2% depending on the exporting company. Previously, there have been tariffs on Indian fruits, onions and sugar. While China’s illiberal economic policies were expected, the US’s bid to what initially was to “level the economic field” has now sown seeds of unprecedented volatility, not in line with expectations with the leading actor of the rules-based international order. However, amidst dark clouds also remain silver linings, shown by economic resilience from recipient actors of illiberal economics.

India’s agricultural saga with US tariffs offers a mirror to America’s current folly. In 2018, when Trump first slapped 25% duties on Indian aluminium and steel, New Delhi fired back with retaliatory tariffs on 28 US products, including apples, almonds, and chickpeas- key imports which affected American farmers. The Indian move in 2018 was defensive and aimed at shielding its nascent manufacturing sector, but the ripple effects spilled into agriculture. US exports of fruits and tree nuts plummeted by over 35%, forcing American farmers in California to dump surplus produce or to pivot to costlier domestic markets. In 2025, American tariffs of 50% have throttled $ 48.2 billion in bilateral trade, with agriculture bearing a disproportionate brunt.

In the US, agriculture contributes merely to GDP by 5% and employs just 1.3% of the workforce. However, tariffs have amplified vulnerabilities in export-dependent commodities. Soybean exports to China, once 60% of the US totals, crashed by at least 70% during the 2018-19 trade war. By 2025, retaliatory duties from Canada, of 35% on grains, Mexico, of 25% on pork, and the EU, of up to 50% on whiskey and cheese, have slashed US farm exports by at least 15% as per estimates from the US Department of Agriculture (USDA). Input costs surged by 12% as supply chains frayed, and examples include fertilisers from Canada and machinery parts from China, which have squeezed midwestern corn and soy farmers’ margins by about 18%. Smallholders have already been battered by climate shocks and debts, and they now face a full-blown crisis, as exporters at ports like Oakland lament 50% cargo drops in perishables. While Trump has managed to strike a 90-day truce with China, in August, the uncertainty persists, deterring investments in irrigation and precision tech that would buffer future storms.

India’s playbook from past frictions showcases resilience and the benefits of a multi-aligned foreign policy. India, hit by Trump’s tariffs, immediately got down to diversification; 8% of Indian exports were diversified to the UAE and to Saudi Arabia. The commerce ministry identified 40-50 alternative markers, with a heavy focus on the Gulf, owing to its proximity, energy linkages, and complementarity demands. The Indian government led outreach to UAE and Saudi Arabia for textiles, chemicals, and auto parts, for example. Shrimp exports, the crown jewel of India’s seafood trade, were hit severely by Trump’s tariffs, but found floodgates elsewhere. A nine-year EU quality snarl got ironed out, greenlighting 102 Indian fisheries for shrimp shipments. Russia’s pipeline of 25 approvals, with more inbound, and Australia’s October nod for unpeeled Andhra Pradesh shrimp, after an eight-year white spot virus freeze, tell the story of resilience and learning from previous experiences with economic bullies. These are not just policy wins, given that it is a lifeline for coastal communities. Moody’s projection of India as the fastest-growing G20 economy at 6.5% through 2027 credits India’s export redirection. Sectors like pharma and IT remain insulated so far, as they are exempt from US tariffs as of now. Gems, jewellery, shrimp, and other sub-sectors have found diversification, exemplifying the fact that there are no permanent friends in international relations, and multi-alignment is the only way forward, given that rule-makers frequently turn rule-breakers as well. Unfortunately, this means that international relations will only be more inward-looking and suspicious of others, just the way it was in the epoch of history preceding World War II, but strengthening oneself militarily and economically is the only way forward from here on.

This article is authored by Sriparna Pathak, professor, China Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.