US Tariffs on India: A Trade Opportunity or Challenge?
US President Donald Trump has announced a 27% tariff on India's exports. This follows Trump's move to impose retaliatory tariffs of 10% to 49% on several of his trade partners. While some sectors will be affected negatively, certain areas will benefit or be exempted from the tariffs. Let’s explore how this will impact India’s trade.
What Has Trump Announced?
On April 2, President Trump announced retaliatory tariffs on imported goods from various countries, including India. The US government confirmed that a 27% tariff will be applied to all goods exported from India to the US. Although some Indian products will be exempt from the retaliatory tariff, the majority of goods will face this significant increase.
What is the Tariff Math Between the US and India?
According to a White House statement, the US applies a 2.5% tariff on passenger vehicles imported from India, while India applies a 70% tariff on US vehicles. Indian apples enter the US duty-free, but India imposes a 50% tariff on US apples. For rice, the US applies a 2.7% tariff, while India places an 80% tariff on US rice. Additionally, networking switches and routers are subject to a 0% tariff in the US, but India applies tariffs of 10-20% on these products.
Which Sectors in India Will Be Most Affected by the 27% US Tariff?
Several sectors in India could be significantly impacted by the 27% retaliatory tariff imposed by the US. The electronics sector, valued at $14 billion, and the gems and jewelry sector, valued at more than $9 billion, are expected to face the brunt of this tariff. However, the 26% tariff announced by Trump will not apply to auto parts and aluminum products for now. The 25% tariff previously declared will remain in place for these products. Furthermore, pharmaceutical products, valued at around $9 billion, are exempted from this retaliatory tariff for the time being. Energy products will also be granted an exemption.
Relief for Some Sectors
The White House has stated that the pharmaceutical sector, which exports goods worth $9 billion, will not be subject to the new tariffs for now. Similarly, energy products are exempt from these tariffs. According to Global Trade Research Initiative, India’s exports in automobiles, gems & jewelry, chemicals & pharmaceuticals, and electronics are subjected to a minimal tariff increase of 1.05%, 2.12%, 1.06%, and 0.41%, respectively, from the US side.