India is not expected to impose countermeasures in response to former U.S. President Donald Trump’s steep 26% tariffs on Indian goods, according to officials familiar with the matter. Citing ongoing and potentially fruitful trade negotiations between New Delhi and Washington, Indian authorities are choosing diplomacy over retaliation

An Indian government source, speaking on condition of anonymity due to the sensitive nature of the discussions, explained that New Delhi has identified a provision in Trump’s tariff directive that allows exemptions for countries demonstrating “significant steps” toward addressing what the U.S. sees as unfair trade practices. India believes its proactive engagement puts it in a favorable position to qualify for relief under this clause.

Officials view India’s early and open engagement in trade talks with the U.S. as a strategic move, one that separates it from other Asian nations such as China, Vietnam, and Indonesia, which have already faced harsher tariff penalties. A second source noted that India, by positioning itself as a willing negotiator, may gain preferential treatment while others remain mired in economic retaliation.

In the wake of Trump’s tariff policy—which has sent ripples through global markets—India has aligned itself with countries like Taiwan and Indonesia, choosing not to escalate the situation with counter-duties. This is in contrast to the European Union, which is gearing up to slap additional tariffs on U.S. goods after Beijing’s retaliatory response to the American measures.

India and the U.S. had already reached a consensus earlier this year to finalize a limited trade pact by autumn 2025, aiming to resolve long-standing disagreements over tariffs and market access. While the Indian Prime Minister’s Office has yet to issue an official statement, past moves by the Modi government—including tariff reductions on premium American motorcycles and whiskey, and the withdrawal of a digital tax affecting U.S. tech firms—signal a strong intention to de-escalate trade tensions.

However, the tariffs are not without potential consequences. Analysts warn that the duties could shave 20 to 40 basis points off India’s economic growth for the current fiscal year. Additionally, the diamond export industry—heavily reliant on the U.S. market—faces severe disruption, threatening tens of thousands of jobs and posing risks to key sectors of the Indian economy.