India mulls boosting US imports to placate Trump after shock 25% tariff but unlikely to buy F-35s

India is weighing options to placate the White House, including boosting US imports, and has ruled out immediate retaliation to President Donald Trump’s surprise 25 per cent tariff threat, according to people familiar with the matter.

Officials in New Delhi were shocked and disappointed by Trump’s announcement on Wednesday, the people said, asking not to be identified as the discussions are private. The government is keen to keep bilateral trade talks on track and is exploring ways to increase purchases from its largest trading partner, they said.

India is considering ramping up its natural gas purchases from the US, and increase imports of communication equipment and gold, the people said. They added that boosting these purchases could help narrow India’s trade surplus with the US over the next three to four years. No defense purchases are being planned, they said.

Officials in New Delhi are not considering any immediate retaliation to Trump’s tariff threat, the people said. The government has already reserved its right at the World Trade Organization to retaliate against the higher US duties on steel and automobiles at a time of its choosing.

India’s Commerce Minister Piyush Goyal — who just days earlier voiced confidence in securing a trade deal with Washington — told Parliament on Thursday that the government is now engaging with exporters to assess the impact of Trump’s tariffs. “The implications of the recent developments are being examined,” Goyal said, as the opposition staged loud protests. He added that his ministry is collecting feedback from exporters and industry groups, and will take “all necessary steps to secure and advance our national interest.”

It remains unclear whether New Delhi’s moves will soften Trump’s stance. Although the US leader and Prime Minister Narendra Modi have shared friendly ties and until recently sounded optimistic about finalizing a trade deal, Trump on Wednesday criticized India for its high tariffs and described its trade barriers as “strenuous and obnoxious.” He also threatened to impose penalties on India for purchasing Russian energy and weapons.

The president later told reporters that Washington and New Delhi were still in talks and that a final decision on the tariff would be made by the end of the week. Just a few hours later, however, he posted on Truth Social, saying, “I don’t care what India does with Russia,” and referred to both nations as “dead economies.”

The US had a trade deficit with India of about $43 billion last year, the 11th largest and well below countries like Vietnam, which stood at about $121 billion, according to figures from the International Monetary Fund. Trump earlier this month announced a tariff rate of 20% for Vietnam.

US Treasury Secretary Scott Bessent on Thursday blamed India for slowing trade negotiations, telling CNBC that the “whole trade team has been frustrated” with New Delhi. He added that the next steps are now up to India, and criticized the South Asian nation for not being a “great global actor,” citing its close ties with Russia.

India’s government said Wednesday it remains committed to a trade deal that’s “mutually beneficial” and highlighted the need to protect its farmers and small businesses. Both sides had already agreed to conclude a bilateral trade deal by the fall of this year, with officials in New Delhi saying earlier this week that negotiators from the US would be visiting the country to continue the talks.

Analysts are uncertain about how seriously to take Trump’s remarks. “Trump being Trump, we can’t be sure,” said Abhijit Das, a New Delhi based international trade expert. “This could be a negotiating ploy as he did something similar with the EU.” The US leader pressured the European Union into a trade deal by initially threatening 30% tariffs, then scaling them back to 15%.

India’s currency and stocks slid on Thursday, although the declines were relatively muted. The rupee fell as much as 0.4% to 87.7375 per dollar before recovering slightly to trade 0.2% lower at 10:50 a.m. local time. Meanwhile, the benchmark NSE Nifty 50 Index was down 0.5%, after having dropped as much as 0.9% earlier in the session.

Despite considering a boost in purchases of American goods, the Modi government is unlikely to buy additional defense equipments from the US, a key demand from Trump, officials familiar with the matter said, asking not to be identified because the discussions are private.

India has informed the US that it’s not keen to buy the F-35 stealth fighter jets, they said. During Modi’s visit to the White House in February, Trump had offered to sell the expensive warplanes to India. However, the Modi government is more interested in a partnership focused on jointly designing and manufacturing defense equipments domestically, the officials said.

The Ministry of Defence in India didn’t respond to a request for comment.

Trump’s recent remarks risk further straining already fragile US-India ties. The US president has repeatedly said that his use of trade pressure helped secure a ceasefire that ended a four-day armed conflict between India and Pakistan in May — a claim strongly denied by Modi and senior officials in New Delhi.

Back in February, when relations between the two leaders were notably warm, Modi extended an invitation to Trump to visit India. New Delhi is expected to host a leaders summit of the Quadrilateral Security Dialogue, or Quad — which comprises the US, Japan, India and Australia — later this year.

“India is not in a position to promise huge import of energy from the US. Also, we are not in a position to talk about huge Indian investment taking place in the US,” said Ajay Dua, a former commerce ministry official, in an interview with Bloomberg TV, adding that the country now needs to be a “little more accommodating in the ongoing negotiations.”