Washington D.C. — In a strategic shift that underscores the Trump administration’s evolving trade posture, U.S. President Donald Trump has suspended reciprocal tariffs for 90 days on a group of countries, including India, which have chosen not to retaliate against American trade duties. At the same time, the president has sharply escalated tariffs on China, raising them to an unprecedented 125 percent, marking a new high point in the ongoing trade war between Washington and Beijing.
The move signals a two-pronged approach by the White House: encourage dialogue with cooperative trading partners while intensifying pressure on adversarial economies like China.
A Tactical Pause for Cooperative Allies
Countries such as India, which have refrained from responding to Washington’s steep tariff increases, will now benefit from a temporary relaxation. The U.S. had earlier imposed a 26 percent tariff on Indian goods, but India chose to engage in diplomacy rather than countermeasures. This stance has now placed it in a favorable category of 75-plus nations spared additional tariff hikes for the next three months.
President Trump, announcing the pause on his social media platform Truth Social, emphasized the “constructive behavior” of these countries. “I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 per cent,” he posted.
The president did not clarify whether the 10 percent tariff would replace the previous rates or act as a temporary ceiling. However, the gesture appears aimed at facilitating progress in ongoing trade talks and preventing further disruptions to U.S. markets, which have been rattled by recent trade policy developments.
India Maintains Diplomatic Approach
India’s strategy of negotiation over retaliation appears to be yielding dividends. External Affairs Minister S. Jaishankar recently held discussions with U.S. Secretary of State Marco Rubio on the “early conclusion” of a bilateral trade agreement, signaling momentum in diplomatic channels.
New Delhi’s restraint, amid tariff pressures, stands in contrast to China’s more aggressive stance and demonstrates India’s broader effort to maintain favorable trade relations with Washington during a politically sensitive year in both nations.
Sources in the Indian government view the 90-day pause as an opportunity to finalize a bilateral understanding that could shield Indian exporters from further uncertainty. There is cautious optimism that the window could allow negotiators to resolve sticking points related to digital services taxes, market access for agricultural products, and regulatory standards.
Tariff Blowback: China Hit Harder
While offering leniency to non-retaliatory nations, Trump has simultaneously intensified penalties on China, his administration’s primary trade adversary. In response to China’s latest countermeasures, the U.S. president ordered a new tariff rate of 125 percent on Chinese imports.
This decision comes after China retaliated to earlier tariff hikes—initially raised from 34 percent to 84 percent—by slapping its own additional duties on American goods. Beijing’s action appears to have hardened Trump’s stance.
“Based on the lack of respect that China has shown to the world’s markets,” Trump wrote, “I am hereby raising the Tariff charged to China by the United States of America to 125 percent, effective immediately.”
The announcement has further strained relations between the world’s two largest economies and injected fresh volatility into global trade dynamics.
Wall Street Reaction and Domestic Pushback
Trump’s trade decisions have sparked concern among financial leaders and industry influencers. Prominent hedge fund manager Bill Ackman had publicly called for a 90-day moratorium, citing market instability and uncertainty among businesses. That call appears to have partially shaped the administration’s decision to offer a temporary reprieve—though notably only to nations that had not responded with counter-tariffs.
Among the most vocal critics of Trump’s escalating tariff regime is Elon Musk, the CEO of Tesla and SpaceX. Musk has warned of adverse consequences for American manufacturers and has engaged in a tense exchange with Peter Navarro, Trump’s trade adviser and a leading architect of the administration’s aggressive tariff policies.
Despite this internal opposition, Trump appears to be standing firm on using tariffs as a tool for geopolitical leverage.
Trade Talks Continue Amid Global Realignments
Behind the scenes, the U.S. Departments of Commerce, Treasury, and the United States Trade Representative (USTR) have been in active discussions with over 75 countries. These engagements cover a broad range of issues, including tariff structures, currency valuations, and non-monetary trade barriers.
According to sources familiar with these negotiations, the 90-day pause is expected to be used to resolve outstanding disagreements with several key partners. However, there is no indication yet of whether the administration will consider extending the pause or make the reduced 10 percent rate permanent.
Analysts suggest that the pause may also serve to de-escalate tensions during the U.S. presidential election year, where economic stability could prove decisive at the ballot box.
Implications for India’s Export Sector
Indian exporters, particularly those in sectors such as textiles, pharmaceuticals, and information technology, are closely watching developments. Industry leaders have long sought clarity on tariff policies and greater access to U.S. markets.
A permanent rollback of increased duties or the successful negotiation of a bilateral deal could boost confidence among Indian businesses and improve trade volumes. According to data from India’s Ministry of Commerce, the U.S. remains India’s largest trading partner, with bilateral trade exceeding $120 billion annually.
By holding off on retaliation, India has positioned itself as a constructive player in an otherwise volatile global trade environment.
Strategic Use of Tariffs in Global Diplomacy
Trump’s latest move highlights a calculated use of tariffs—not just as economic tools but as instruments of diplomacy. By distinguishing between cooperative and adversarial nations, the administration aims to reward engagement while punishing defiance.
Yet critics warn that such tactics could lead to fragmentation in global supply chains and increased costs for American consumers. The long-term impact on global trade alliances remains uncertain, with some nations reconsidering their dependence on U.S. markets due to unpredictability in policy.
Moreover, with China being targeted so sharply, retaliatory steps from Beijing could further escalate tensions, especially if the raised tariffs disrupt critical imports such as electronics, machinery, and rare earth materials.
With the 90-day pause now in effect, focus shifts to the effectiveness of diplomatic negotiations in resolving outstanding trade issues. If successful, it could lead to more stable and mutually beneficial arrangements. Failure, however, might see the return of aggressive tariffs and renewed market turmoil.
For India, the current situation offers a critical opportunity to solidify economic ties with the U.S. through calm diplomacy. The government in New Delhi is likely to intensify its engagement with Washington in the coming weeks, hoping to turn temporary relief into lasting advantage.
As global economic centers recalibrate their trade strategies in response to Washington’s unpredictable policy shifts, the next three months will be crucial in determining the course of international trade for the near future.?
