50% Trump tariffs: Call on support measures hinges on trade deal

The government is still assessing the impact of the 50 per cent tariff imposed by the United States (US) on several Indian goods, and a call on the anticipated relief package will depend on the progress of the trade agreement between both the countries, among other factors. 

“We are adopting a cautious approach before coming up with measures (for exporters). Currently, we (finance, commerce and other ministries) are assessing the impact of the additional tariffs of different sectors,” a senior government official said. 

Currently, both countries are negotiating a comprehensive resolution that addresses both the pending issues in their trade deal and Washington’s concerns over New Delhi’s continued purchase of Russian oil. They are also eyeing an early conclusion of the deal — by November. 

India is bargaining hard with the US for substantial reduction in the additional tariffs, which not only includes removal of 25 per cent punitive tariffs but also reducing the reciprocal tariff to at least 15 per cent. 

In a major blow to India, the US administration in August imposed a steep 50 per cent tariff on several Indian goods, including a 25 per cent punitive tariff for purchasing Russian oil. Since then, exporters have been meeting commerce and finance ministers to convey their concerns over the tariff-related challenges, considering that for several sectors, there is a large dependence on the US market. 

Following that there were high-level discussions related to the World Trade Organisation (WTO) compliant support measures, including credit-related support schemes, especially for the MSMEs, to help exporters hit by the 50 per cent tariff. The idea has been to tackle the liquidity-related challenges by the small exporters in labour intensive sectors and prevent stress on the working capital, protect employment and allow exporters to sustain operations until new markets are tapped. 

“It is important not to be in a hurry to roll out measures/packages and assess the timing of the roll out of such measures, especially because we are negotiating a trade deal with the US. Apart from that, we are still assessing the impact of the higher tariffs on sectors,” the official cited above said.