With Donald Trump sworn in as the new US president, India is closely monitoring the impact of his policies on the national economy. Several inter-ministerial meetings have already been held and ministries have been working on various strategies to offset any impact from their announcements. But as of now, the government remains in wait and watch mode, sources said.

Trump’s tariff policies remain a key check for India, and the Union Budget 2025-26 is looking to rationalize and reduce customs duties on several items as part of a planned overhaul, but also hopes that it will send a positive signal to the United States about India’s situation. tariff position

On the 1st, Trump signed an executive action to investigate the reasons for the US trade deficit with foreign nations, which will likely include the issue of tariffs. It has also announced that it would impose a 25% tariff on imports from Canada and Mexico starting February 1, but has not yet drawn up any further tariff action plans.

“President Trump’s 2025 executive orders issued on Day One bring challenges and opportunities for India. While they may create strategic and economic disruption, they also provide India with an opportunity to reassess its energy policies, strengthen public health infrastructure and reduce dependencies in critical sectors,” noted Ajay Srivastava, founder of the economic think tank Global Trade Research Initiative (GTRI) in a report, adding that the many Day one’s executive orders are just the beginning. “We should be prepared for surprises on tariffs and trade soon,” he said.

Concerns about a global tariff war are also rising with expectations that Trump will raise tariffs on imports.

Macquarie global strategists Viktor Shvets and Kyle Liu said in a report that they expect that under Trump 2.0, average US tariffs will likely double from 5% to 10%. “We also continue to believe that blanket punitive tariffs are unlikely, even as a negotiating tactic,” they said.

Nomura analysts believe China will likely face the largest tariff increases among US trading partners, including many consumer goods that were not targeted in Trump’s first term.

“We expect Trump to largely deliver on his campaign promise, but the proposals are likely to be softened, especially for tariffs on Canada and Mexico, in our view. We expect Chinese tariffs to increase by 35 pp cumulatively. In addition, Trump will likely impose additional 10% tariffs on many other countries in Europe and Asia and 5% tariffs on Mexico.As a result, we expect the effective tariff rate on the US imports increase to around 10%,” they said in a report.

Trump’s other executive orders, including plans to end automatic citizenship for children born in the US to non-citizen parents, could also have a direct impact on India, but could face a legal challenge.

“President Donald Trump’s proposal to end automatic citizenship for children born in the US to non-citizen parents has raised significant concerns among Indian families. This policy would directly affect thousands of children born to Indian parents who hold US green cards United or acting as Indian diplomatic personnel, which could alter their long-term residency and citizenship trajectories,” the GTRI note said.

Meanwhile, the impact of Trump’s policies on inflation and the rupee also needs to be watched. There are concerns that his policies could fuel inflation in the United States, prompting the Federal Reserve to raise interest rates. This could have consequences for the global economy.