Why India has not answered Trump’s tariff pressure the way Canada has

Canadian Prime Minister Mark Carney is openly rejecting Donald Trump’s pressure tactics and has pledged a dollar-for-dollar response to US tariffs. His approach differs sharply from that of former Canadian prime minister Justin Trudeau and has raised a wider question: why has India not responded to Trump’s policies in the same way?

The immediate dispute carries significant economic risks. Trump has imposed 50% tariffs on nearly $20 billion worth of goods from Canada. Carney’s proposed retaliation could affect businesses and workers on both sides of the border because the Canadian and US economies are deeply connected.

Carney has also drawn a red line over what he described as other unacceptable US demands, including any attempt to restrict Canada’s ability to sign trade agreements with other countries. He has argued that such limits would weaken Canadian sovereignty.

Carney’s challenge to Trump

Carney’s position follows an assessment he made in Davos seven months earlier. In January, he said the rules-based global order was weakening and warned that the world was living through an era of competition between great powers. He called on middle powers to work together.

The Canadian government’s confrontation with Washington has found public support through the “Buy Canadian” campaign, which began after Trump’s threats. Trump has also spoken about making Canada the 51st US state.

The tariff dispute affects a broad range of Canadian products, including wine, dairy goods, furniture, clothing, cement and hockey equipment. Canada’s possible countermeasures could also reach strategically important exports such as energy and potash.

Ontario Premier Doug Ford said in an interview published on Monday that Canada could stop exporting electricity to the United States if the trade war deepened. Ontario supplies power to several US states, including New York, Michigan and Minnesota. Carney backed Ford’s remarks on Monday, telling journalists that no option was off the negotiating table.

Carney has now publicly halted talks and promised reciprocal tariffs. Geopolitical analyst Brahma Chellaney described the move as one that few leaders had shown the courage to take. Writing on X on 22 August, Chellaney said that every negotiation with the Trump administration was a test of power because the administration repeatedly changed its own goals and conditions.

Chellaney also argued that Trump’s proposal to Canada was not a genuine trade agreement but a protectionist arrangement containing permanent tariffs. He compared it broadly with the kind of arrangement Trump had indicated to India.

Why India’s calculation is different

India’s relationship with the United States is structured differently from Canada’s. Although India is a large economy and is less economically dependent on the US than Canada, its relationship with Washington includes technology, defence, investment, visas, energy and strategic coordination in the Indo-Pacific.

China remains a major strategic challenge for India. The country needs to continue defence, intelligence, technology and diplomatic coordination with the United States in the Indo-Pacific. A confrontation with Washington could therefore carry costs beyond the tariff dispute.

The approach associated with Prime Minister Narendra Modi is to keep the dispute limited, preserve the broader strategic relationship and seek concessions from Trump without turning the disagreement into a personal contest. The supplied analysis presents this as a possible explanation for India’s restraint, rather than as a claim that India has no disagreement with US policy.

India and the United States have reached an interim trade deal, but the deal has been described as leaning more towards the US. Political scientist Bharat Karnad wrote on 25 January that Modi’s restrained response to Trump represented surrender rather than strategic maturity. He argued that India should reduce its dependence on Washington, take a tougher negotiating position and build alternative partnerships.

Karnad said Canada’s stance was notable because of its substantial dependence on the US. According to figures for 2023-24, 77% of Canada’s total exports go to the United States. Despite that dependence, Carney challenged Trump and said he was prepared to respond to the tariffs on a dollar-for-dollar basis.

Karnad’s central criticism is that India is offering concessions instead of retaliating against tariff pressure, even though it is less economically dependent on the United States than Canada. He has argued that Trump’s approach should not be treated as a temporary change, but as a long-term shift in US foreign policy. In his view, India should prepare for repeated demands and pressure from Washington rather than rely on a stable and comprehensive strategic partnership.

India’s limited tariff leverage

Canada’s close trading relationship with the United States gives Ottawa possible ways to affect American producers, border states and supply chains. Restrictions on Canadian energy, potash or electricity could have direct consequences in the United States.

India does not have equivalent options, according to former World Trade Organization ambassador Jayant Dasgupta. Dasgupta, who served as India’s ambassador to the WTO from 2010-14, examined the difficulty of imposing tariffs on the United States in an article written for the Indian Express on 28 August last year.

He identified mineral fuels and oil, rough and cut diamonds, machinery, organic chemicals, plastics, fruit and dried fruit among India’s major imports from the United States. Most of these goods, he wrote, are raw materials or intermediate products.

Dasgupta’s argument was that retaliatory tariffs on these imports could harm both India’s domestic and export markets. He also warned that tariff retaliation could damage the services sector, an impact that India needs to avoid.

That difference helps explain why a Canadian-style response would be harder for India to reproduce. Ottawa has access to energy and electricity measures that could affect identifiable US markets. India’s principal imports from the United States include inputs and materials whose higher cost could affect Indian businesses and exporters as well.

The two countries are therefore responding from different economic and strategic positions. Canada is using its close integration with the US economy to challenge Trump’s tariff policy, while India is balancing tariff pressure against its interests in technology, defence, investment, energy, visas and cooperation in the Indo-Pacific.