In late July 2025, U.S. President Donald Trump suddenly announced a 25% tariff on Indian imports and derided India (and Russia) as "dead economies." He posted on social media that the U.S. "does very little business" with India and accused New Delhi of onerous trade barriers. These sharp words immediately clashed with reality: India is among the world's fastest-growing major economies.

When leading American AI chatbots were asked if "the Indian economy is dead," all replied no – describing India as "dynamic," "one of the fastest-growing" and "far from dead." Union Minister Piyush Goyal also dismissed Trump's claim, noting India is the world's fastest-growing major economy and set to be the third-largest soon. Indian leaders were quick to respond: opposition parties blamed the Modi government for poor negotiation, while ruling-party spokesmen fired back that India's economy is "alive and kicking," listing its massive GDP, strong markets, and industrial output as proof.

Economists warn the new 25% levy could shave off roughly 0.4 percentage points of GDP growth for the next year. India's exporters – especially labour-intensive goods – fear the worst. For example, the gem and jewellery industry (with ~$10 billion in annual U.S. exports, nearly 30% of its global sales) warned the tariffs will "place immense pressure" on the entire value chain and jobs. In early trading, India's stock indexes and rupee dipped on the news.

Several analysts note that Trump's move comes amid stalled talks over agriculture and trade, and that it may be more geopolitical posturing than permanent damage. Nevertheless, even if negotiations resume, India must brace for a period of disruption: higher duties on its goods will make Indian products less competitive in the U.S., potentially pushing buyers towards Vietnam or Indonesia.

Coinciding with the tariff drama was Trump's "Winning the AI Race" Summit in Washington (July 2025). There he urged U.S. tech giants to "put America first" – warning that "the days are over" when companies hire workers in India or build factories abroad. Trump signed three executive orders to supercharge U.S. AI: fast-tracking data centers and infrastructure; insisting federal-funded AI be "ideologically neutral" (no "woke" biases); and easing export controls to ship American AI software and chips to allies.

For India, this signals uncertainty in the software sector. Trump's "America First" stance implies fewer outsourcing opportunities for Indian engineers and tighter U.S. control over technology supply chains. Indeed, industry observers say the orders "add to growing uncertainty for Indian professionals" in areas like data science and AI.

Despite the noise, the long-term story is that AI could power India's growth. India's own tech strategy (by NITI Aayog) treats AI as a new "factor of production" that can raise productivity and inclusive development. Global studies back this up. Accenture (2017) found that AI could add about US$957 billion to India's GDP by 2035, boosting the growth rate by ~1.3 percentage points.

More recent reports on generative AI forecast similarly large gains: EY/ET estimate that gen-AI alone might contribute $359–438 billion to annual GDP by 2029–30 (a 5.9–7.2% uplift). In total, embracing AI across industries could yield over $1–1.5 trillion cumulatively by FY2030.

At AUNII.io, we understand the complex interplay between global trade policies and technological advancement. Our expertise in AI solutions and digital transformation positions us to help Indian businesses navigate these challenges while capitalizing on the opportunities that AI presents. Whether it's developing resilient supply chains, optimizing operations, or creating innovative AI-driven products, we're here to support India's continued economic growth.