New Delhi, Dec 17 (UNI) Gita Gopinath, Economist and former First Deputy Managaing Director of IMF , underscored that both India and the US “must engage constructively to negotiate tariffs” at a time when global trade is being reshaped by geopolitics and national security concerns.
Gopinath said the world economy has entered a phase where trade policy is no longer driven purely by economics, but increasingly by strategic and security considerations.
Focusing on India’s trade strategy, she said, “Negotiations with the US will be crucial in the coming years. Given the depth of trade, investment, and technology linkages between the two countries,”adding, “tariffs should be addressed through dialogue and cooperation.”
However, she noted that with sustained engagement, tariff levels for India could come down over time, supporting exports, investment flows, and supply chain integration.
Gita, who is currently serving as the Gregory and Ania Coffey professor of Economics at Harvard University, emphasised the need for India to broaden its trade relationships beyond any single market and said, “Building stronger economic partnerships with the UK and the European union would help India reduce risks arising from global trade fragmentation and create alternative avenues for growth.”
This shift became more visible in 2025, when the US raised tariffs, altering supply chains and forcing countries to reassess their trade dependencies, she noted while addressing the India Economic Conclave here on Wednesday.
“Tariffs have clearly moved higher across several economies, but the real impact is often misunderstood. Tariff rates tend to look more dramatic than the effective tariffs actually paid by firms,” she explained, urging a more nuanced reading of global trade data.
She pointed out that Europe’s decision not to retaliate against recent tariff hikes has played an important role in preventing an uncontrolled escalation of trade tensions.
At the same time, she cautioned, “The situation remains fluid, with the possibility of additional tariff measures from China as global economic and geopolitical pressures evolve.” However, she said she does not expect the US to significantly escalate tariffs on China further, suggesting that major economies may now be seeking stability rather than sharp confrontation.
Gopinath highlighted India’s relatively strong economic position. The IMF has revised India’s growth projection upward to 6.6 per cent for 2025–26, reflecting robust domestic demand and improving medium-term prospects. She said that technological progress, especially in Artificial Intelligence, is emerging as a critical factor helping economies absorb the negative effects of higher tariffs.
