India eyes trade win as US tariffs hit rivals harder, BTA talks underway

Despite Washington’s move to impose a 26 per cent retaliatory tariff, New Delhi will have a ‘first mover advantage’ since India and the United States (US) have already begun talks for a trade deal, a government source said on Saturday.

 

“India is better off than its competitor nations/regional rivals such as Indonesia, Vietnam, among others since higher reciprocal tariffs have been imposed on them,” the source said.

 

On April 2, US President Donald Trump signed an executive order introducing new reciprocal tariffs, imposing additional ad valorem duties ranging from 10 per cent to 50 per cent on imports from a host of countries. The baseline 10 per cent duty took effect on Saturday, with additional country-specific duties coming into force from April 9.

 

However, according to a White House Fact Sheet, the US can decrease the tariffs if trading partners take ‘significant steps to remedy non-reciprocal trade arrangements’ and align with America on economic and national security matters’. 

 

India and the US are holding intense discussions on a proposed ‘fair, balanced and equitable trade deal’ bilateral trade agreement (BTA) that both sides intend to finalise by the fall of 2025. India will do a with the US which is win-win for both nations, adding that all options on the negotiating on the table that will discuss both goods and services as a part of the BTA.

 

The immediate impact of reciprocal tariffs may initially impact demand from the US. eventually, demand is likely to pick up as Washington is readying for income tax cuts and petroleum prices are plummeting, the source said. 

 

Amid fears that certain sectors such as carpets, marine products have adversely impacted due to the reciprocal tariffs, the department of commerce is in dialogue with exporters on the anticipated impact. The government is also ready to help if exporters reach out.

 

India is also keeping a watch on the inbound shipments entering the country reciprocal tariffs’ announcement has intensified the threat of dumping of Chinese products into the Indian market. This is because the US has imposed a higher tariff of 34 per cent on China — in addition to the 20 per cent tariff that has already been levied–bringing the total tariff to 54 per cent. The source said that India can take WTO compatible action, if required.

 

The source further said that America’s plan to impose reciprocal tariffs on most countries have resulted in prominent trade partners reaching out to India for free trade agreements (FTAs). Apart from the US, India also is negotiating trade deals with theUnited Kingdom (UK), the European Union (EU), New Zealand, Peru, Chile, Oman. Talks for a trade deal with Bahrain, Qatar or with the Gulf Cooperation Council (GCC) may also materialise.