Trump’s latest tariff relief reveals how politics affects US policy: Indian negotiators should take note

Last week, Trump lifted ‘reciprocal’ import duties on a selection of grocery items—from coffee and spices to fruits and their juices. Since these are not easy for the US to substitute with homegrown produce, levies on their import had pushed up their retail prices and made people grumble.

Tariff relief in the case of these items was clearly driven by White House sensitivity to the cost of living. Retail inflation in the US has hovered around the 3% level lately. This is a percentage point above its central bank target, but well below the 8% range hit in 2022 under the Joe Biden presidency, a spike that played a role in Trump’s 2024 victory.

While Trump is not eligible for another term in office, he might have taken note of the damage that tariff-inflated prices could inflict on his popularity, trade agenda and advocacy of cheaper credit.

India is only a minor beneficiary of America’s latest tariff cuts. Exporters of tea and spices have reason to cheer, but most others reeling under Trump’s 50% India-specific tariff have their hopes pinned on a bilateral trade deal to ease their path.

Now that inflation has evidently joined the US policy calculus, we may be tempted to use price stability in trade talks as part of our pitch for across-the-broad tariff relief. The size and composition of our basket of exports to America, however, does not have much scope to affect general price levels there.

But then, New Delhi has other asks that may find political resonance in Washington. For example, India is reportedly looking for the same sort of pact with the US that it signed with the UK on social security payments.

On the face of it, the US has no pressing reason to alter the rules of this safety-net scheme. Willy-nilly, Indian citizens who work in the US must contribute to it, but if they leave before making a decade’s worth of contributions without a break, they are ineligible for this system’s healthcare and old-age payout benefits.

Employees on H-1B visas and the like, however, typically have shorter job stints in the US, which effectively turns the money they pay into a tax. Ideally, they should get some of that sum back if they return home. Or be spared having to pay up in the first place.

Under our UK agreement, Indian employees in London, or Britons working in Delhi for that matter, can make payments solely to the safety-net system of their home country for the first three years of employment. Levelling the turf for Indians employed in the US would make sense too.

This is a just cause. But the proposal may work better if it’s packaged for political appeal.

A surge in anti-immigration sentiment in the US appears to have left a vocal chunk of Trump’s MAGA vote base keen to see H-1B visa holders depart. If the US eases the social-security burden borne by Indians on short stints, or starts compensating leavers, it would end their disincentive to leave US shores before putting in at least 10 years of work.

Strictly speaking, US social security is not a quid pro quo deal; what one pays is not owed back. It is more like mandatory group insurance. Yet, nobody likes to be overtaxed, as Indians in the US often feel they are, and social-security relief for them could be an easy sell in today’s context.