Trump’s 26% Tariffs: A Setback or a Strategic Opportunity for India’s ICT Industry?

Donald Trump’s aggressive tariff policies have once again sent shockwaves through global trade. His latest move—a 26% reciprocal tariff—aims to boost U.S. manufacturing, but its ripple effects could alter supply chains, disrupt businesses, and reshape economic relationships.

Tech Caught in the Crossfire

Trump’s previous tariff policies, particularly those targeting China, hit the ICT industry hard. Companies reliant on Chinese manufacturing—including Apple, Dell, and Cisco—saw increased costs, leading to price hikes for consumers and businesses alike. If Trump reintroduces or intensifies these tariffs, it could force tech companies to rethink supply chains, further diversify manufacturing hubs, or pass costs onto customers.

However, some firms might see opportunities in these trade barriers. Domestic tech manufacturers and semiconductor companies, such as Intel, could benefit from reduced competition from Chinese counterparts. The Biden administration’s CHIPS Act aimed to strengthen domestic semiconductor production, and a Trump presidency could accelerate this trend—though at the cost of rising product prices in the short term.

Will Tariffs Really Bring Jobs Back?

One of Trump’s key arguments for tariffs is the idea of bringing manufacturing jobs back to the U.S. While some ICT companies have announced U.S.-based production plans, such as TSMC’s Arizona semiconductor plant, experts argue that tariffs alone won’t solve the industry’s labor shortage or high production costs. The U.S. lacks a sufficiently skilled workforce for large-scale electronics manufacturing, and reshoring efforts often take years to materialize.

Moreover, retaliatory tariffs from other countries could hurt U.S. exports, impacting companies like Qualcomm, which relies on foreign markets for a significant portion of its revenue. If a trade war escalates, American tech firms could lose global competitiveness rather than gain from protectionist policies.

A Blow to Exports, But an Edge Over China?

Trump’s tariffs present a challenge for India’s exports, given that the U.S. accounts for 18% of India’s total goods exports. The tech sector, particularly electronics, electricals, and auto components, faces immediate concerns about cost structures and competitiveness.

However, industry leaders argue that India could leverage the situation to outpace China and Vietnam in electronics manufacturing.

“It’s on expected lines. Our IT services and pharmaceutical sectors are fortunate to be exempt from these tariffs. However, globally, the economic impact will undoubtedly be significant. What’s interesting is that we’re poised to gain an edge over Vietnam and China in the electronics sector and will most likely outperform these countries,” said Dr. Ajai Chowdhry, Founder of HCL and Chairman of EPIC Foundation.

At the same time, Chowdhry warns of the hidden risk of China’s electronic waste flooding Indian markets, urging vigilance to avoid becoming a “trading colony of China.”

Sectoral Impact: Who Wins and Who Loses?

According to Ashok Chandak, President of the India Electronics & Semiconductor Association (IESA), the tariffs could disrupt global supply chains and increase market uncertainty, but they also create an opportunity for India to take a dual-track approach—balancing negotiations and countermeasures to safeguard trade interests.

Industries That Benefit

Semiconductors & Pharma – Spared from tariffs, reinforcing India’s role in global supply chains.

Electronics Manufacturing – India is in a stronger position compared to China, Vietnam, Taiwan, and Thailand, which face higher tariff hikes.

Industries That Face Challenges

 Auto Components – A high-risk sector, as increased tariffs could slow export momentum.

Trade Flow & Profit Margins – Higher costs on certain goods may disrupt pricing strategies for Indian firms.

A Shift from ‘Make in India’ to ‘Innovate in India’

Instead of merely absorbing the cost impact, industry leaders suggest that India use this moment to transform its role in the global supply chain—moving beyond assembly and into high-value innovation.

“The US tariff should be seen as a catalyst, not a constraint. This is India’s moment to amplify the ‘Make in India’ mission into an ‘Innovate in India’ revolution,” said Mahendra Nahata, Managing Director of HFCL.

Nahata emphasizes that the telecom sector should pivot to manufacturing advanced green infrastructure—like solar-powered 5G radios and AI-driven network solutions—to align with U.S. decarbonization and tech leadership goals. This approach could even lead to sector-specific tariff relief from the U.S. if India positions itself as a partner in solving global challenges.

India’s Negotiation Strategy: Trade Deals & Tariff Adjustments

The challenge now lies in how India negotiates its trade relationship with the U.S. Experts suggest a combination of bilateral trade agreements and tariff adjustments on select U.S. goods as potential counterstrategies.

“Fortunately, both India and the US are eager to expand bilateral trade to $500 billion, creating opportunities for a mutually beneficial agreement,” said Chandak.

Ashok Gupta, Chairman of Optiemus Infracom, also sees a strategic advantage in India’s tariff rates, arguing that this difference could attract global electronics manufacturers to shift production to India, making it a preferred destination over competitors like Vietnam.

A Turning Point for India’s Tech Future

While Trump’s tariffs present immediate challenges, they also push India to think beyond cost competitiveness and toward tech leadership. If the country can move up the value chain—focusing on AI, energy-efficient tech, and export-ready innovations—it may not only weather this tariff storm but emerge stronger on the global stage.

To capitalize on this opportunity, India needs to enhance its infrastructure and streamline policies. Expanding logistics capabilities, upgrading ports, and simplifying regulatory procedures can make India a more attractive alternative for global businesses looking to relocate operations.

The Indian government’s Production-Linked Incentive (PLI) schemes for semiconductors and electronics manufacturing need further reinforcement to attract foreign investment and develop a robust supply chain ecosystem.

While exports face challenges, India’s large and growing consumer market presents an opportunity to offset potential losses. Strengthening domestic production and encouraging local consumption of electronics and tech products could help mitigate trade imbalances and boost India’s technology sector.

Global Market Reactions and Future Trade Strategies

Global markets will be watching how other countries respond to Trump's trade policies. The European Union, Canada, and Mexico have already suggested possible countermeasures to U.S. policies. China is further tightening regulations on U.S. firms operating in the country. For countries such as India, emerging economies will rely on new trade agreements and developing alliances as mitigation strategies. The current landscape has countries looking toward regional trade agreements—like the Indo-Pacific Economic Framework (IPEF)—to counteract U.S. tariffs pressure and create new value supply chains.

What Does This Mean?

The implications of Trump's administration for the global tech industry must be considered beyond short-term shocks; actual shifts are likely permanent. Trade strategy, supply chains, and pricing strategy will need to be recalibrated.

For India, the question is not merely how to adapt but how to lead. Will India leverage this opportunity to become a global provider of innovation, or will India in catch itself in the middle of the economy?