Trump’s Tariffs vs. India’s Atmanirbhar Bharat: Two Paths to Economic Self-Reliance Amid Global Uncertainty

Even before Donald Trump became U.S. President, the world was gripped by global uncertainty, with no end in sight to ongoing conflicts. Trump announced his sweeping yet “kind” tariffs on April 2, 2025. However, this move triggered a market meltdown not only in Europe and Asia but also in the U.S.

On April 4, 2025, the U.S. stock market suffered its worst crash since the COVID-19 pandemic, with investors losing over $5 trillion in just a few hours. The crash echoed memories of "Black Monday," when the Dow Jones Industrial Average plummeted by 22.6% in a single day on October 19, 1987.

The Rationale Behind the Chaos

Trump justified the tariffs by claiming that the U.S. had long been a victim of unfair trade practices. He argued that the tariffs would help bring jobs and manufacturing back to American shores. Additionally, he pointed to the massive trade deficit the U.S. has with major countries like China, Russia, and Mexico. By imposing tariffs, his goal was to “reverse the deficit, or at least break even.”

In 2024, the United States saw a significant rise in its trade deficit, reaching a record $918.4 billion—a 17% increase from the previous year.

While multilateral trade has become the norm, President Trump is not the first leader to take measures to reduce his country’s reliance on foreign nations. In contrast to Trump’s controversial tariff policies, Prime Minister Narendra Modi launched the Atmanirbhar Bharat initiative in India, in the throes of the COVID-19 pandemic, to promote self-reliance and strengthen the country’s manufacturing and employment sectors.

Under the Atmanirbhar Bharat initiative, Product-Linked Incentive (PLI) schemes were introduced across 14 sectors, including mobile manufacturing, pharmaceuticals, automobiles, speciality steel, telecom, and advanced chemistry cell (ACC) batteries. As of December 2024, the PLI schemes had mobilized investments totalling ₹1.46 lakh crore (approximately USD 17.5 billion). These investments led to production and sales worth ₹12.50 lakh crore (USD 150 billion), with exports reaching ₹4 lakh crore (USD 48 billion). Additionally, the initiative created direct and indirect employment for approximately 9.5 lakh people.

India’s defense production reached a record ₹1.27 lakh crore in the fiscal year 2023-24, marking a 16.7% increase from the previous fiscal year. Defense exports surged by 32.5%, achieving a record value of ₹21,083 crore in the same year.

In electronics manufacturing, India’s output reached ₹5.5 lakh crore, with the government aiming to expand this figure to USD 300 billion (approximately ₹22 lakh crore). India also became the largest producer of COVID-19 vaccines globally and remains the leading supplier of generic drugs, producing over 50% of the world’s vaccines and 40% of generic medicines.

In addition, India’s startup ecosystem, energy, and agriculture sectors have seen substantial growth.

While Atmanirbhar Bharat has yielded positive outcomes in terms of increasing domestic production and export growth, India still faces a significant trade deficit, which reached $302 billion in 2023-24. This indicates that India remains heavily dependent on imports, particularly in sectors such as electronics, energy, and industrial machinery. To achieve complete self-reliance, increased investment in technology, research and development (R&D), and skill development is crucial.

Contrasting Approaches: India vs. the U.S.

Both the U.S. and India have taken steps to boost their manufacturing sectors, but their approaches differ significantly. India’s Atmanirbhar Bharat initiative positions the country as a rising force in the global economy. On the other hand, Trump’s tariffs have caused global economic turmoil in a world already struggling with uncertainty.

India was subjected to a 27% tariff, while China, one of the hardest-hit countries, faced 34% tariffs, in addition to the 20% duties imposed earlier.

In retaliation, China imposed a 34% reciprocal tariff on U.S. imports, prompting Trump to levy an additional 50% tariff on Beijing, effective April 9, bringing the total tariff on Chinese goods to 104%.

While it is expected that India stands to benefit from being the only major Asian nation to be “slapped” rather than “punched” by U.S. tariffs, the Indian government is cautious for now, as it is expected to finalize a trade deal by the end of 2025.

The Economic Outlook

Economists have warned of a potential recession due to the escalating trade tensions. However, Trump remains confident, dismissing concerns and suggesting there is no cause for alarm.