The escalating trade tensions between the United States and India have taken a dramatic turn, with President Donald Trump imposing a cumulative 50% tariff on Indian goods. This move has sparked strong reactions in India, with political figures like Shashi Tharoor leading the charge against what they perceive as unfair and unwarranted economic aggression. Tharoor, a prominent Congress MP and former diplomat, has been particularly vocal, arguing that Trump has "picked the wrong people to insult" and suggesting that India should respond with equal force.

Tharoor's central argument revolves around the idea of reciprocity and fairness. He points out that India's average tariffs on American goods stand at 17%, a significantly lower figure than the 50% now imposed by the U.S.. According to Tharoor, if the U.S. is levying such high tariffs, India should not hesitate to do the same, raising tariffs on American exports to 50%. He has questioned why India should be intimidated by such actions, asserting that no country should be allowed to threaten India in this manner.

The rationale behind Trump's increased tariffs is primarily linked to India's continued import of crude oil from Russia. The U.S. has expressed its displeasure with this trade relationship, viewing it as a violation of the sanctions imposed on Russia following the Ukraine conflict. However, Tharoor and others have pointed out what they see as hypocrisy in this stance, noting that other countries, including the U.S. itself, continue to trade with Russia in various sectors. Tharoor highlighted that China purchases almost double the oil that India buys from Russia and has been given 90 days to negotiate, while India has been given only three weeks.

The potential impact of these tariffs on the Indian economy is a major concern. With a $90 billion trade relationship between the two countries, a 50% increase in the cost of Indian goods could significantly reduce their competitiveness in the American market. Sectors like leather, chemicals, textiles, gems, jewellery, footwear and shrimp are particularly vulnerable. Experts predict a potential 40-50% cut in US-bound exports. Moody's Ratings suggests India's real GDP growth may slow by around 0.3 percentage points from its current forecast of 6.3% for the fiscal year ending March 2026.

In response to these challenges, Tharoor has urged the Indian government to explore alternative strategies, including diversifying export markets and strengthening trade relationships with other countries. He specifically mentioned the Free Trade Agreement with the UK and ongoing talks with the EU as potential avenues for expanding India's trade horizons.

The situation remains fluid, with only a limited window for negotiation before the full impact of the tariffs is felt. The coming weeks will be crucial in determining whether India and the U.S. can find a way to resolve their differences and avoid a prolonged trade war. Some analysts suggest that India could consider making concessions in the agriculture and dairy sectors, where the U.S. has been seeking greater market access. However, this would involve navigating complex domestic political considerations, as protecting the interests of farmers remains a top priority for the Indian government. Other potential responses include providing direct support to exporters and preparing for retaliation by publishing a list of politically sensitive US exports.