In the complex world of global trade, India finds itself in a unique position amid US President Donald Trump’s tariff policy. At the heart of this situation lies a critical clause called ‘Modification Authority’, which could be the game-changer for India.
What is the Modification Authority Clause?
Under Section 4 of the tariff order, which is part of the International Emergency Economic Powers Act (IEEPA), the US President holds the power to adjust tariffs — not just raise them, but also reduce them. But there’s a condition: the partner country must take “significant steps” to fix a non-reciprocal trading arrangement. In simpler terms, if a country like India shows willingness to make trade relations more balanced, it opens the door for lower tariffs.
“India has an early mover advantage and it must act quickly to make the most of it.”
India’s Head Start in Trade Talks
Unlike many other nations, India has already entered into advanced trade negotiations with the Trump Administration. In fact, India is likely the first country to receive a US Trade Representative (USTR) delegation under Trump’s tariff regime. This signals India’s proactive stance and its importance in America’s strategic calculations.
“India is among the few nations where trade talks are not just proposed but actively progressing.”
This ongoing dialogue puts India in a favorable light, especially when compared to other countries still struggling with retaliatory tariff measures and stalled trade discussions.
Tariffs as a Bargaining Tool for the US
From Trump’s perspective, the Modification Authority is more than just a legal clause — it’s a powerful negotiation tool. It allows him to use tariffs to pressure countries, but also reward them by lowering those tariffs if they comply or cooperate on trade issues.
“This clause gives Trump leverage to both punish and reward — making trade negotiations more dynamic and unpredictable.”
But there’s more at play than just trade.
Beyond Trade: Strategic Convergence Between India and the US
The India-US relationship extends far beyond commerce. Both countries share strategic interests in areas such as national security, defence cooperation, nuclear energy, and space technology. A rigid tariff policy could risk slowing down progress in these sensitive sectors.
“For the US, maintaining strong cooperation with India in defence, space, and nuclear sectors is far more valuable than tariff gains.”
Recognizing this, a well-negotiated trade deal could give Trump the justification to make exceptions for India, while still staying true to his broader trade philosophy.
The Road Ahead
As trade talks progress, India must leverage its early engagement and push for a favorable deal under the Modification Authority. The current momentum is an opportunity that may not last long, especially with shifting global priorities.
“If India plays its cards right, it could become the first major exception to Trump’s tariff regime.
