With Donald Trump’s election victory, a new era of trade tensions has begun—essentially the USA vs. the world. Trump has openly threatened to impose reciprocal tariffs on various countries, signaling the onset of another trade war. In a recent speech before the U.S. Congress, he announced that these tariffs would take effect from April 2nd.
While China appears confident and well-prepared to counter any economic aggression from the U.S., other nations—including India and European countries—are far less assured. China’s confidence stems from its massive trade surplus with the U.S., having exported $502 billion worth of goods while importing only $165.16 billion in 2023. This staggering imbalance gives China considerable leverage. Moreover, China enjoys a trade surplus with almost every major economy worldwide, reinforcing its stronghold.
However, the situation for India is vastly different. Unlike China, India does not have a significant trade advantage over the U.S. In fact,The United States is one of the few major economies where India enjoys a trade surplus—a surplus that exists primarily due to high import duties India imposes on U.S. goods. If a trade war were to erupt, this advantage could quickly evaporate, leaving India in a precarious position.
India’s Trade Data: A Reality Check
India’s top 10 trading partners reveal a critical insight: the U.S. is the only major country where India enjoys a trade surplus. Here’s how the numbers stack up:
| Rank | India’s Major Trade Partners | Exports (USD Billion) | Imports (USD Billion) | Total Trade (USD Billion) | Trade Balance (USD Billion) |
| 1 | China | 16.66 | 101.75 | 118.41 | -85.09 |
| 2 | United States | 77.52 | 40.77 | 118.29 | 36.74 |
| 3 | United Arab Emirates | 35.63 | 48.02 | 83.65 | -12.39 |
| 4 | Russia | 4.26 | 61.43 | 65.69 | -57.17 |
| 5 | Saudi Arabia | 11.56 | 31.81 | 43.37 | -20.25 |
| 6 | Singapore | 14.41 | 21.2 | 35.61 | -6.79 |
| 7 | Iraq | 3.35 | 30 | 33.35 | -26.65 |
| 8 | Indonesia | 5.99 | 23.41 | 29.4 | -17.42 |
| 9 | Hong Kong | 8.24 | 20.45 | 28.69 | -12.21 |
| 10 | South Korea | 6.42 | 21.14 | 27.56 | -14.72 |
What a Trade War Would Mean for India
A trade war with the U.S. would be economically devastating for India. Here’s why:
- Heavy Dependence on U.S. Exports – The U.S. is India’s biggest export market, especially in the IT sector.
- Foreign Investment & Employment – U.S. companies are the largest foreign employers of Indian skilled labor.
- Digital Infrastructure Reliance – India depends on American firms for crucial digital services like enterprise software, GPS navigation, operating systems, cloud computing, and social media platforms.
- Tech Giants’ Presence – Companies like Amazon, Google, and Microsoft collectively generate around $5 billion in business in India.
- Foreign Direct Investment (FDI) – The U.S. is the third-largest FDI investor in India, bringing in significant capital and expertise.
Can India Afford a Trade War with the U.S.?
For now, the answer is a resounding no. India’s economy is not yet equipped to withstand a full-fledged trade war with the U.S. The economic ties between the two nations are deeply interwoven, and any disruption would have far-reaching consequences.
However, India must take strategic steps to reduce dependency, diversify its export markets, and strengthen domestic industries. The global economic landscape is shifting, and sooner or later, India will need to prepare for economic self-reliance. The time to start is now.
