By Mahendra Singh
The trade ties between India and the United States have grown into a vital economic partnership, but recent moves by U.S. President Donald Trump—imposing hefty tariffs and urging Apple to ditch plans for Indian factories—have stirred the waters. As India emerges as a global manufacturing hub, particularly for smartphones, the stakes are high. This article explores the depth of India-US trade, the impact of Trump’s tariff policies, ongoing trade negotiations, and what his push for U.S.-based Apple production means for India’s ambitions.
A Robust Trade Relationship
India and the U.S. share a booming trade relationship, with total bilateral trade hitting $192 billion in 2023-24. Goods trade accounted for $120 billion, while services like IT and outsourcing added $72 billion. India sends pharmaceuticals, textiles, jewelry, and electronics—especially iPhones—to the U.S., while importing aircraft, machinery, and natural gas.
India’s exports to the U.S. reached $78 billion, driven by a surge in smartphone production under the government’s Production-Linked Incentive (PLI) scheme. Apple’s partners, including Foxconn and Tata, exported iPhones worth ₹1 lakh crore ($12 billion) from April to January 2024-25, up from $7.2 billion the previous year. Meanwhile, India imported $42 billion in goods, giving it a $36 billion trade surplus. Services trade, with India exporting $42 billion in IT services, remains a cornerstone of this partnership.
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Trump’s Tariff Offensive
In April 2025, Trump rolled out “reciprocal tariffs” targeting India and over 180 other countries to boost U.S. manufacturing. India faces a 26-27% tariff on its exports to the U.S., far lower than China’s 145% but still a blow to exporters. India’s tariffs on U.S. goods, averaging 13.5% and higher on farm products, prompted this response.
These tariffs threaten India’s electronics boom. Smartphone exports, now worth ₹2 lakh crore ($24 billion) annually, could take a hit. The Indian Cellular and Electronics Association warns that countries like Brazil and the UAE, with tariffs as low as 10%, might lure manufacturers away. Apple, a major player in India’s export story, projects a $900 million cost increase this quarter, potentially hiking iPhone prices by 17% in the U.S.
Trade Talks: A Balancing Act
India and the U.S. are racing to finalize a Bilateral Trade Agreement (BTA) by late 2025. India has proposed bold concessions, including zero tariffs on U.S. pharmaceuticals, steel, and auto parts for limited quantities, aiming to slash its average tariff from 13% to under 4%. This would cover 60% of tariff lines, a big leap from the current 3%.
India’s strategic importance as a U.S. ally and its massive consumer market give it leverage. Unlike export-heavy Vietnam, India’s domestic demand cushions it against tariff shocks. Still, challenges persist—farmers worry about agricultural concessions, and competitors like Vietnam, offering 0% tariffs, are circling. Geopolitical noise, like Trump’s claims of mediating India-Pakistan ties, adds friction, but Indian officials are confident. The PLI scheme, pumping ₹8,700 crore into electronics, signals India’s resolve to stay competitive.
Trump’s Apple Ultimatum
On May 15, 2025, Trump made headlines by telling Apple CEO Tim Cook to scrap plans for expanding iPhone production in India and focus on the U.S. Speaking in Qatar, he said, “India can take care of themselves. Build here.” This aligns with his push to bring manufacturing home, but it’s a tough ask for Apple, which has bet big on India.
India now produces 14-15% of global iPhones, with plans to hit 25% by year-end. The PLI scheme and a shift away from China have made India a supply chain star. But Trump’s directive could stall this momentum. Moving production to the U.S. would be a logistical nightmare—analysts estimate a $30 billion cost and 3-5 years to shift just 10% of Apple’s supply chain. U.S. labor costs could triple iPhone prices, pushing a $999 model to $2,300.
Apple’s response is unclear, but Cook’s knack for navigating tariffs suggests quiet diplomacy. During Trump’s first term, he won exemptions for Apple products. Recent talks with Commerce Secretary Howard Lutnick hint at similar efforts. Meanwhile, Apple’s stock has slid 15%, losing $500 billion in value since tariffs hit.
What’s at Stake for India?
India’s lower 26% tariff compared to China’s 145% makes it a prime destination for manufacturers like Apple. The electronics sector, growing 54% year-over-year, is a success story. But risks loom:
- Competition: Vietnam’s 0% tariff pitch and lean supply chains in Saudi Arabia could divert investment.
- Economic Hit: Tariffs may trim India’s GDP growth by 0.5% and inflate U.S. prices, curbing demand.
- Apple’s Pivot: If Apple bows to Trump’s pressure, India’s “Make in India” vision could falter.
Yet, India has cards to play. Its consumer market, strategic ties with the U.S., and proactive trade concessions position it well. A successful BTA could cement India’s edge, ensuring long-term gains in electronics and beyond.
Looking Ahead
The India-U.S. trade relationship, worth $192 billion, is a powerhouse facing new tests. Trump’s tariffs and his push for U.S.-based Apple production challenge India’s manufacturing rise, but opportunities abound. By securing a favorable trade deal and leveraging its strategic strengths, India can navigate these turbulent times and solidify its place in the global economy.
Mahendra Singh is the editor of The Interview Times, covering global trade and economic trends.