Donald Trump's tariff war: Trade expert breaks down US-India tariff clashes, says it’s consumers who lose the most

When Donald Trump reintroduced steep "reciprocal tariffs" on Indian exports, it reignited debates about the real costs of protectionism — especially for consumers and global trade partners. While designed to penalize what Trump sees as unfair trade imbalances, the move places 26% tariffs on nearly all Indian goods heading to the US. It’s a bold, disruptive gesture — but who really ends up paying for it?

Reacting to the tariff decision, a trade professional laid out the implications clearly in a detailed post that quickly sparked online discussion.

“What's the tariff amount? 26% on all goods exports from India to US, with certain exceptions,” the expert wrote.

And who shoulders this cost? “Broadly, it will be US consumers. The importing company in the US will pay the tariffs, but they will likely pass it on to the consumers. Just like how high tariffs in India have to be paid by YOU, the consumer.”

Despite the hike, Indian exporters aren't entirely out of the game. “For most of our exports, our competitors are China, Vietnam, Cambodia, Bangladesh and Turkey. US Tariffs on all of them are higher than those on India (except for Turkey). So, our products won't lose competitiveness in the US market. BUT absolute demand of certain products by US consumers could go down.”

A specific concern is luxury goods: “For example, we export gems and semi-precious stones to the US. Demand for those could go down as prices go up.”

On India’s possible response, the professional predicted a cautious path. “Broadly, yes. But not immediately, except maybe on certain specific goods. Negotiations for a trade deal with the US have started. If they result in an interim agreement by fall 2025, you will see India lowering tariffs on a range of US goods. Do note that negotiating an agreement in six months is an INCREDIBLY AMBITIOUS timeline for India.”

What the US seeks from India is expansive: “Lower tariffs on automobiles, agricultural products, dairy and more. Stronger intellectual property protections for US companies, especially pharma companies. No MSP to Indian farmers on Rice and Wheat.”

The trade expert cautioned against giving in too easily: “Lower tariffs on agriculture or removal of MSP will anger Indian farmers. So will allowing US dairy products to be sold in India. We might make a concession on cheese though. Protecting US pharma interests will kill India's generic medicine industry. So, India has to be very careful in what it can offer.”

Lower tariffs could mean cheaper imports — but there’s a catch. “Yes, they will. Lower prices, more competition, it's good for consumers, at least in the short term. Long term, US companies could monopolize a market and then start exploiting Indian consumers.”

The conversation turned philosophical when someone asked why India should protect local conglomerates at all. “Partly, yes. There’s definitely crony capitalism in India. And yes, US companies threaten the interests of the big Indian conglomerates. But there's absolutely no certainty that US companies will do better... they might enter into joint ventures with Indian conglomerates and add to the problem.”

On the broader horizon, the professional saw opportunity. “The US is no longer the linchpin that holds the west together, and so the western world order is coming apart. As a developing country with a huge and growing market, there are opportunities for India here... If we play our cards right, India could funnel massive investment into the country, bringing jobs, development and prosperity.”

But it won’t be easy. “Realising this future will require incredible leadership, diplomacy, and governance. I’ll leave the judgment of whether we have that to you.”

When asked how ending MSP benefits the US, the explanation was blunt: “The US argument (which I don't agree with) is that India provides excessive MSP support to Indian farmers, which harms US farmers... The MSP is usually higher than domestic market price, which incentivizes farmers to produce more rice and wheat. More export means large supply in the international market, causing international prices to be depressed... The US believes that India dropping MSP would lower rice and wheat production, lowering the supply in international market, and raising prices.”