Reciprocal US tariffs prompt India, others to lower duties: Donald Trump

The statement came just days before Trump plans to outline country-based reciprocal tariff plans on April 2 to counter "unfair trade practices" that, according to him, have hurt America for decades

The US move to impose reciprocal tariffs from Wednesday (April 2) is prompting countries, including India, to reduce tariffs, American President Donald Trump said on Monday.

 

“I think I heard a little while ago that India will be dropping its tariffs and why didn’t anyone do it a long time ago. A lot of countries will be dropping their tariffs,” Trump told reporters at the Oval House.

 

The statement came just a day before Trump plans to outline country-based reciprocal tariff plans to counter “unfair trade practices” that, according to him, have hurt America for decades.

 

While there’s no word from the Indian government on tariff cuts, New Delhi and Washington have begun bilateral talks over their intention to finalise the first phase of a bilateral trade agreement (BTA) over the next few months. The idea behind the pact is to enhance market access, reducing tariff and non-tariff barriers.

 

There is no clarity on the details of the implementation of the reciprocal tariffs, with respect to how they will be calculated, making it difficult for countries, including India, to firm up a strategy to tackle and counter it.

 

Trump has said that reciprocal tariffs will apply to “all countries”, without exception.

 

On Monday, White House Press Secretary Karoline Leavitt had pointed to the tariff rates from the European Union, Japan, India and Canada while speaking to reporters, signalling that these countries will be among the targets of the reciprocal tariffs.

 

Meanwhile, Indian industry has urged the government to protect it from the impact of reciprocal tariffs. The industry is worried about the impact of the reciprocal tariffs and how it will affect jobs. As a result, they want a trade agreement with the US as early as possible as it could be a way to mitigate the impact of the reciprocal tariffs, people aware of the matter said.

 

An Emkay Global report estimates that India would potentially lose $6 billion, or 0.16 per cent of gross domestic product (GDP), in exports to the US if a 10 per cent broad tariff is imposed. The loss will widen to $31 billion at 25 per cent tariffs.

 

“While the nature of reciprocal tariff implementation is unclear, we believe a broad country-level tariff by the US is the most likely scenario, given complications around sector/commodity-level tariffs, the report said.

 

It further said that India could be among the worst-hit nations as per broad reciprocal differentials. “...the key susceptible sectors (auto, pharma, and electronics) are far better placed than feared, whereas apparel and gems/jewellery are the most exposed,” the report said.

 

According to a PwC report, evolving US trade policies, including tariff realignments and other measures, require Indian businesses to develop a long-term resilience strategy. As a result, identifying alternative markets can help businesses mitigate losses from US tariff hikes.

 

“To mitigate risks from US tariffs, Indian exporters can proactively explore trade opportunities in other markets, using India’s new and upcoming free trade agreements (FTAs) with the UK, EU, Oman and the Gulf region, New Zealand, etc. to gain access into new geographies…,” the report added.