India has historically embraced economic reforms during financial challenges, such as the 1991 liberalization. Now, with US President Donald Trump’s tariff war, India faces a new crossroad—either further open its economy or lean into protectionism.

Trump has criticized India’s high tariffs, which stand at 12% compared to the US (2.2%) and China (3%). High tariffs increase costs for businesses and consumers while limiting global trade competitiveness. Although India has strong service exports, its manufacturing sector lags due to protectionist policies.

Ahead of Modi’s meeting with Trump, India lowered tariffs on select US products. Commerce Minister Piyush Goyal has been negotiating trade deals, and India is also pursuing free trade agreements with the UK, EU, and others.

Economists argue that high tariffs discourage efficiency and competition. Lowering tariffs could enhance India’s role in global trade and create jobs, particularly in manufacturing. However, concerns remain about foreign dumping, especially from China.

While some experts believe Trump’s policies could push India toward reform, others warn against overcompensating to please the US. If India strategically reduces tariffs while protecting key industries, it could position itself as a key player in global trade.