Despite its scale and strategic role, India's lack of targeted leverage left it paying higher U.S. tariffs than smaller economies
India is a giant by almost every measure. Second largest country by population, fourth in GDP, seventh in land area, and strategically important in today's US-China rivalry for global influence. But when it came to securing favourable trade deals with Trump's administration, these impressive statistics did not translate into better tariff terms. The warm bear hugs between Modi and Trump, the massive diaspora rallies, and India's geopolitical weight did not show up at the negotiating table; as always with Trump, leverage and optics mattered most.
Looking at estimated 2025 GDP and tariff rates with the US, the results are counterintuitive. Vietnam, with a GDP of $0.4 trillion, secured a 20% tariff rate. Pakistan also stood at $0.4 trillion GDP with a 19% tariff. The Philippines, with $0.46 trillion GDP, faced tariffs of 19%. Singapore, at $0.51 trillion GDP, had one of the lowest tariffs at 10%.
Larger economies such as Indonesia ($1.43 trillion GDP) had a 19% tariff, and South Korea ($1.79 trillion GDP) enjoyed a lower rate of 15%. The UK, with a $3.59 trillion GDP, matched Singapore at 10%. India, at $4.19 trillion GDP, had the steepest rate at 50%. Even the EU, despite its $19.99 trillion GDP, faced only 15% tariffs.
At first glance, one might assume that a large and strategically important economy like the EU or India would automatically secure a sweeter deal than a smaller player like Vietnam or Bangladesh. Under Trump's rules, that was not the case.
For decades, wealthy nations, including the United States, provided trade preferences and market access as a form of economic diplomacy. The Generalised System of Preferences (GSP) was one such mechanism, reducing import duties for around 100 of the world's poorest nations, greatly benefitting countries like Cambodia and Bangladesh. But under the "America First" doctrine, these goodwill gestures were abandoned. There were no automatic tariff breaks β every country now needed tangible bargaining chips.
Some nations secured better trade terms by offering massive investment pledges. South Korea pledged $350 billion, Japan $550 billion, and the EU at least $600 billion. Not all leverage came in cash; Indonesia effectively reinvested in the US economy by ordering 50 Boeing aircraft, a significant move for Garuda Indonesia, whose fleet included just over 50 Boeings.
Vietnam illustrates this leverage game well β it controls 27.7% of all U.S. footwear imports and a commanding 65% of the U.S. sports footwear market. Steeper tariffs on Vietnam would have hit "MAGA" wallets, so the US settled for a relatively manageable 20% tariff. In contrast, Indian textiles account for only 6-8% of the U.S. textiles and apparel market.
Losing India as a supplier is not as disruptive as losing Vietnam's footwear dominance. American brands can (and already have) shifted textile production to other countries quickly. In fact, imports from Mexico surged 12% in May 2025 compared to a year earlier as companies diversified sourcing.
In 2024, China supplied roughly 22% of U.S. textiles and apparel imports, worth $18.3 billion. Vietnam supplied around 18%, valued at $15.9 billion. India contributed between 6-8%, worth over $10 billion. Bangladesh's share was between 9-10.5%, valued at $7.4 billion, while Cambodia accounted for 3-4%, worth $3.5 billion.
Cambodia's experience highlights the limits of goodwill. It offered zero tariffs and 10 Boeing aircraft purchases yet still ended up with a 19% U.S. tariff rate; proving that gestures alone did not work under Trump's system.
India's size matters, but only in the right context. It still has untapped trade negotiation cards it could play. Instead of relying solely on political friendship, India could link tariff discussions to granting market access for major U.S. businesses. For example, it could tie lower tariffs on Indian exports to expanded access for Amazon and Walmart in India, or delay approving the IPO of PhonePe as a bargaining move. Opening the door to Chinese e-commerce giant Alibaba could influence the movement of the S&P 500, a metric that Trump closely watches. Breaking WhatsApp's monopoly by introducing WeChat, or allowing TikTok alongside YouTube Shorts, could increase leverage. Likewise, letting Chinese electric vehicle maker BYD compete with Tesla in India could send strong signals to U.S. investors.
Real economic leverage comes from self-reliance. India's successes in its space programme, nuclear technology, and digital payment system (UPI) show the value of cultivating unique assets β something China understood early on when it invested heavily in homegrown tech and supply chains.
India can balance its memberships and alliances strategically, strengthening the QUAD with the US, Australia, and Japan to safeguard the Indo-Pacific, while also remaining active in the Shanghai Cooperation Organisation (SCO) with China and Russia to support a multipolar world.
Prime Minister Modi's decision to open direct flights to China in August was smart, though it might have had more impact earlier in April 2025, when U.S. trade positions were still in flux.
In today's global trade climate, economic strength and not friendships or flattering photo opportunities protects jobs and national wealth. Negotiations are less about who you are and more about what you control. Vietnam's footwear market share mattered more than India's GDP, and Cambodia's symbolic gestures fell flat. For India, the lesson is clear: play cards that U.S. consumers and investors will notice βand do it quickly.
Anshuman works in Asset Management Industry and is based in Singapore
