On July 31, US President Donald Trump imposed a “reciprocal” tariff of 25% on India and 68 other trade partners of the US, marking the worst ever episode of unilateralism. Through this move, the US president modified his earlier decision of April 2 wherein he threatened to targeted imports from 57 trade partners with “a reciprocal tariff to rectify trade practices that contribute to large and persistent annual United States goods trade deficits”. India was then slapped a 36% tariff, among the lowest imposed on South Asian countries. However, India’s tariff burden now is the higher than most of its neighbours in South and Southeast Asia, by five-six percentage points. Tariffs on China would be known on August 12, upon conclusion of its bilateral negotiations with the Trump administration.India’s main concerns regarding Trump’s reciprocal tariff are regarding three product groups having substantial exposure to the US market, namely mobile phones, pharmaceuticals and garments, accounting for 39% of India’s exports to the world’s largest economy. Though Trump excluded pharmaceuticals from reciprocal tariff, he has also spoken of imposing 200% tariff on these products, which is a real worry. As regards mobile phones and garments, tariff differentials between India and Southeast Asian countries, including Vietnam, are not large enough to pose a serious challenge to India in the short run. But notwithstanding, Indian producers would need to improve their competitiveness to maintain their position in the US market.What concerns India most is Trump’s threat of imposing “a penalty” for buying “a vast majority of … military equipment from Russia”, and for being “Russia’s largest buyer of energy”. This is particularly in light of Trump’s strong support for the Sanctioning Russia Act of 2025, a Bill aimed at pressuring Russian President Vladimir Putin to end the ongoing war in Ukraine. This Bill includes a controversial provision to impose a 500% tariff on imports from countries such as India and China that purchase Russian energy products.Skewed bilateral trade negotiationsThe relatively high 25% reciprocal tariff imposed on India can be interpreted as the Trump administration’s frustration at not making headway in the ongoing bilateral trade agreement (BTA) negotiations. These negotiations were initiated after Prime Minister Narendra Modi’s Washington visit in February this year, a few hours after Donald Trump signed the Presidential Memorandum on “Reciprocal Trade and Tariffs”, the formal announcement of his tariff war. Questions will, therefore, be asked why the Indian government agreed to negotiate the BTA when the US president was at his aggressive worst. It is also important to note that there was no agreement between India and the US to enter into bilateral trade negotiations in the past due to deep differences in several critical areas. The US was the only G7 country with which India had not initiated bilateral trade negotiations.Also read: The US Has Junked the ‘Rules-Based Order’. Here’s What it Means for the WorldBy agreeing to conclude a BTA with the US, India faced a much larger set of problems compared to the other countries that negotiated trade deals with the Trump administration in the recent past. While all other countries tried to lessen the blow of reciprocal tariffs by offering better market access to the US, besides sweetening their offers with promises to buy US defence equipment and/or aircraft, India was involved in negotiations covering all the issues included in a comprehensive BTA, and, thus, faces complex trade-offs. This was because the US has repeatedly argued that most of India’s critical laws and regulations must be amended as they adversely affect its businesses, the report of the United States Trade Representative, 2025 National Trade Estimate Report on Foreign Trade Barriers being the most recent example. Thus, the BTA negotiations provided the US with an opportunity to realise its demands.The sticky point: agricultureThe starting point of the BTA negotiations was, of course, the issue of opening India’s market for US products to reduce the US’s merchandise trade deficit of nearly $46 billion in 2024-25 ($51.5 billion according to the US Census Bureau). For reducing this deficit, the US targeted India’s domestic market for major agricultural commodities, including cereals. The US president and his cabinet colleagues made frequent references to India’s high agricultural tariffs in general, and cereals in particular. US commerce secretary Howard Lutnick posed a direct question, why won’t India buy even a single bushel of American corn? He argued that Trump understands that the best way to expand US farmers’ access to global markets is by negotiating deals with countries (including India) that currently block their products.The Trump administration’s push for greater market access for agricultural products in large markets like those in India is a reflection of the political support the US president received from the US’s farming-dependent counties: in 2024 elections, almost 78% of these counties supported Trump. Moreover, US farm lobbies, especially the National Corn Growers Association, the American Soybean Association, the US Wheat Associates and the National Association of Wheat Growers, have been strongly lobbying the US government for access to the Indian market.The Trump administration’s push to pry open India’s agricultural market has been the major sticking point in the BTA negotiations as India never included major agricultural commodities and dairy products in any free trade agreement negotiated thus far. With the largest segment of India’s workforce dependent on agriculture, and an overwhelming majority of country’s peasantry consisting of small and marginal farmers, protecting livelihoods was a priority for the government. The government has also steadfastly maintained its policy of domestic self-sufficiency in food gains it had adopted in the mid-1960s.Given the strength of these agricultural lobbies, particularly their proximity to the US president, the government deserves the credit for standing up to Trump administration’s pressures and protecting the country’s farmers. There is little doubt that the costs of yielding to the American pressures and sacrificing the interests of the country’s farmers would be far more than the burden that the 25% tariffs would impose. But it must also be underlined that the government needs to improve its negotiating bargain in agriculture through focused programmes to get India’s agriculture out of its perennial crisis.Standing up to unilateralismMore enduring than the adverse impacts of Trump’s reciprocal tariff on individual countries would be the price of his aggressive unilateral trade policy that the global trading system would have to pay. The contours of Trump’s unilateralism, unveiled on the first day of his second term through the “America First Trade Policy”, challenges the post-war multilateral trading system, overseen by the General Agreement on Tariffs and Trade (GATT) and the World Trade Organisation (WTO). The principal objective of Trump’s trade policy is to “negotiate agreements on a bilateral or sector-specific basis to obtain export market access for American workers, farmers, ranchers, service providers and other businesses”. Negotiating trade deals seeking benefits for the US at the expense of its partner countries is an affront to the spirit of multilateralism.In his first term, Trump had virtually reduced the WTO to a shell by dismantling the all-important dispute settlement body of the organisation. In his second term, he is using his ‘America First Trade Policy’ to obliterate the principles of the multilateralism in trade aimed at bridging the economic divide between the advanced and the developing countries. For realising this objective, several mechanisms were adopted, the most important of which is the “special and differential treatment” (S&DT) extended to lesser developed countries. S&DT allows these countries to take less onerous commitments for opening their economies, including via longer transition periods to accept them.Also read: Modi Needs a Trade Ceasefire With TrumpOne important S&DT provision is Article XXXVI.8 of the GATT, which states, “The developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed contracting parties”. This Article allowed developing countries to maintain higher levels of tariffs so that producers in these countries do not face unlevel playing field vis-à-vis the large corporations from the advanced countries. Article XXXVI.8 of the GATT upholds the widely accepted principle of international law, attributed to Thomas Jefferson, the third US president: “There is nothing more unequal than the equal treatment of unequal people.”Trump’s reciprocal tariff turns Jefferson’s adage on its head, by seeking S&DT for the US. Thus, developing countries are forced to offer duty free access to US products, while the US has raised its average effective tariff rate, which, after the July 31 announcement, stands at 18.3%, the highest since 1934. Developing countries must, therefore, respond to the hegemon through collective action, for if Trump’s unilateralism is allowed to go unchecked for long, it would be impossible to rein him in. On several occasions in the past, the need for the South to work together to challenge the North has been discussed. There is no better occasion to revisit those discussions than now. A beginning in this regard could be made in the BRICS; this forum needs to meaningfully stand up to the interests of the South. Alongside, major emerging economies like India must reduce their dependence on the US market, as China has shown. In 2018, the US accounted for over 19% of China’s exports, but in the first half of 2025, US’s share had steeply reduced to below 12%.Biswajit Dhar is former professor of economics, Jawaharlal Nehru University.