US President Donald Trump's recent executive orders, signed on the first night of his second presidency, outline a protectionist 'America first trade policy.' This includes imposing global "supplemental tariffs" and threatening a 100 per cent tariff on BRICS nations, including India, if they reduce reliance on the US dollar for foreign trade.   

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Will Trump 2.0 impact India's budget?

Economists believe these measures will have minimal immediate impact on India's budget. The Indian government had already anticipated potential tariff changes when the US election results were announced in November, factoring in these risks during the budget preparation process. 

India's finance minister, Nirmala Sitharaman, is expected to maintain a calibrated approach in the upcoming budget, balancing domestic competitiveness and global trade integration. Economists suggest that tariff-related adjustments, including import duties, will not be drastic. While Trump’s tariffs may raise global inflation, the Indian government will likely keep input costs in check without making major changes to import duties.   

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India's long-term commitments in climate and health-related areas are also expected to remain unaffected by US Policy shifts. 

While the US has announced 25 per cent tariffs on imports from Mexico and Canada starting February 1, economists point out that the impact on commodity prices could affect India's inflation rates.   

Experts like Madan Sabnavis note that higher labour costs in the US could drive up wages, influencing global prices. India is already evaluating responses, including potential trade deals and tariff cuts, to mitigate the effects of these global trade policies.