As US President Donald Trump prepares to dismantle the world trade order by unveiling reciprocal tariffs at his “Liberation Day” event on Wednesday, the rest of the world, including India, is weighing multiple scenarios.

Trump is scheduled to announce the new tariffs at a Rose Garden event, dubbed as a “Make America Wealthy Again” celebration, in the White House after US markets close at 4pm (1.30am IST, Thursday).

Deliberations over the tariff plans were coming down to the wire, with still several proposals said to be on the table, including a tiered tariff system with a set of flat rates for countries, as well as a more customized reciprocal plan, Bloomberg reported.

Under the tiered tariff system, countries may see their goods face levies at either a 10% or 20% rate depending on their tariff and non-tariff barriers on US goods.

The White House had this week complained about the trade practices of the European Union, Japan, India and Canada.

The Wall Street Journal said Trump’s aides were studying a more targeted option, while Fox News said the US president was still considering a flat 20% global tariff.

The White House was silent on Tuesday on the details of Trump’s plan amid all the speculation.

‘India dropping tariffs’

However, Trump on Tuesday said India was willing to cut tariffs, hinting at possible relief for India from the sweeping US tariffs.

“I heard that India is going to be dropping its tariffs substantially. A lot of countries are going to drop their tariffs,” Trump said at a White House press briefing.

Consultancy firm PwC on Tuesday suggested Washington may assess reciprocal tariffs on five factors–existing tariffs on US goods, internal taxes, non-tariff barriers and regulatory burdens, foreign exchange policies and any other trade practices deemed unfair by the US Trade Representative (USTR).

The uncertainty over the scale and details of tariffs have shaken markets, while prompting analysts and ratings firms to cut growth forecasts and forcing central banks to factor in inflationary pressures.

India’s commerce ministry is working on a couple of scenarios based on tariff differentials and the levies that Trump has imposed on various countries and sectors till now to protect the domestic industry, The Economic Times reported.

USTR flags concerns over Make in India

On Monday, the USTR released its 2025 National Trade Estimate report, listing key policy and practices of countries that affect US exports, investments, and digital trade.

The latest report, which covers 59 countries, including India, highlights trade and regulatory challenges between the US and India.

These include issues related to tariffs, non-tariff barriers, intellectual property, services, digital trade, and transparency, with most of these being a repeat of the earlier reports, and few that have already been resolved, trade policy think tank GTRI said in a report.

A key concern for the US is India’s high import duties, especially on farm products. India charges 150% on alcoholic drinks and 100% on walnuts and raisins—rates the US said make it hard for their goods to compete.

India also has put in place non-tariff barriers such as import bans and licensing rules. For instance, animal-based oils are restricted, and importing some medicines requires special approval. The US wants these rules removed, but India sees them as important for protecting health, safety, and the environment.

The US has also flagged India’s strict import licensing for remanufactured goods and medical devices. Last year, India stopped issuing licenses for refurbished US medical devices.

While Washington views this as unnecessary red tape, India worries that relaxing the rules could lead to a flood of secondhand or low-quality products that might harm consumers and hurt local industries, GTRI said in the statement.

‘Minimum support price concerning’

In government procurement, India reserves contracts for domestic suppliers under its “Make in India” policy, which the US claims disadvantage foreign firms. Delhi, however, views them within the World Trade Organization (WTO) norms and as crucial for supporting local manufacturing and employment.

India’s intellectual property regime is another pain point for the US.

Washington finds India’s patent system overly bureaucratic and limiting—particularly Section 3(d) of the Patents Act that restricts pharma patentability. India defends this as a safeguard against evergreening and to ensure affordable medicines.

In services, curbs on foreign investment in multi-brand retail, digital media, and insurance continue to frustrate the US. India, however, fears that opening up too quickly could threaten small businesses and traditional retailers.

The US also opposes India’s generous farm subsidies, particularly the minimum support price (MSP) system for crops such as rice and wheat. These, it argues, distort global prices and harm US farmers. India defends MSPs as essential to protect its agrarian economy and food security, especially for its 700 million rural poor, GTRI added.

In recent months, India has taken a slew of measures, including reducing duties, seen as assuaging US concerns.

The reduction in basic customs duty is part of a continuous process aimed at improving self-reliance, and not a reaction to reciprocal tariffs, finance minister Nirmala Sitharaman said last month.

She said the government’s attempt at duty rationalization has continued for two consecutive years to strengthen manufacturing and boost battery and advanced chemistry capacities.

In Parliament on Tuesday, minister of state for commerce Jitin Prasada said India’s tariff policy aims to regulate trade, protect local industries and generate revenue through taxes on imports and exports.

Referring to NITI Aayog’s statement on tariff reduction being necessary for India’s economic growth, Prasada said, the government initiated comprehensive tariff reforms to correct inverted duty structures wherein import duties on raw materials exceed those on finished products.