Explained: How will Donald Trump's reciprocal tariffs impact India?

Trump Tariffs on India: India Prime Minister Narendra Modi is a great friend, but India has not been treating us right. India charges us 52%, so we will charge them half of that - 26%, Trump said

Trump Tariffs, Trump Tariffs India: After months of speculation and public hullabaloo, US President Donald Trump announced a barrage of “reciprocal tariffs” on nearly all the countries in the world, including India.

 

In an overnight address to mark the US' "liberation day", Trump told reporters that large and persistent annual US goods trade deficits led to "the hollowing out of the US’ manufacturing base; inhibited the US' ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered the defence-industrial base dependent on foreign adversaries". 

 

 

"It is the policy of the United States to rebalance global trade flows by imposing an additional ad valorem duty on all imports from all trading partners except as otherwise stated.  The additional ad valorem duty on all imports from all trading partners shall start at 10 per cent and increase, thereafter, for trading partners. These additional ad valorem duties shall apply until such time as I determine," Donald Trump said at the 'Make America Wealthy Again' event at the White House Rose Garden.

 

US' reciprocal tariffs, Trump said, aims to promote manufacturing in the US and provide Americans a level playing field against other countries that have been indulging in "years of unfair trade practices" by imposing high tariffs and other non-trade barriers on US goods, blocking the US’ access to various global markets.

 

"The decline of US manufacturing capacity threatens the US economy in other ways, including through the loss of manufacturing jobs.  From 1997 to 2024, the United States lost around 5 million manufacturing jobs… The future of American competitiveness depends on reversing these trends," Trump said.

 

Notably, the US President went ahead with stringent tariffs against more than 180 countries despite several economists’ issuing warnings that higher tariffs could, yet again, flare up inflation in an economy that is making slow progress towards achieving its long-term inflation target of 2 per cent. 

 

More Tariffs Ahead?

  While any retaliatory tariffs by affected countries could start a trade war and jeopardise the global growth scenario, Donald Trump has threatened countries against using any retaliatory or remedy measures.

 

Should any trading partner retaliate against the United States in response to this action through import duties on US exports or other measures; should they take significant steps to remedy non-reciprocal trade arrangement; and should US manufacturing capacity and output continue to worsen, I may further modify the Harmonised Tariff Schedule of the United States (HTSUS) to increase duties, Trump warned.

 

Trump Tariffs on China, Japan

  Among the hardest hit countries, Cambodia faces tariffs at 49 per cent, Laos 48 per cent, Madagascar 47 per cent, Vietnam 46 per cent, Sri Lanka and Myanmar 44 per cent each, Botswana 37 per cent, Thailand 36 per cent, China 34 per cent, Taiwan and Indonesia 32 per cent each, and Switzerland 31 per cent.

 

Among the bigger world economies, Trump announced a 20 per cent tariff on European Union, 10 per cent on the UK, and 24 per cent on Japan. 

The baseline 10-per cent tariffs would be effective at 9:30 AM IST on April 5, while higher, country-specific tariffs would be effective from 9:30 AM IST on April 9.

 

US Tariff News: Trump Tariffs On India

As the US President Donald Trump bombarded various countries that run a high trade imbalance with the US, with hard-hitting tariffs, India was no exception. 

 

  India, Trump said, will now face a 27-per cent blanket tariff on all goods and services imported to the States.

 

"The World Trade Organization (WTO) Members agreed to bind their tariff rates on a most-favored-nation (MFN) basis, and thereby provide their best tariff rates to all WTO Members. They, however, did not agree to bind their tariff rates at similarly low levels or to apply tariff rates on a reciprocal basis.  Consequently, according to the WTO, the United States has among the lowest simple average MFN tariff rates in the world at 3.3 per cent, whereas India has a simple average MFN rate of 17 per cent" Trump said on India.

 

Training guns against India, and citing examples of tariff difference, Trump said the US imposes a 2.5 per cent tariff on passenger vehicle imports (with internal combustion engines), while India imposes 70 per cent.  

 

"For network switches and routers, the United States imposes a 0 per cent tariff, but for similar products, India levies a higher rate of 10 per cent. Similarly, for rice in the husk, the US MFN tariff is 2.7 per cent, but India’s rate is 50 per cent," he added.

 

Trump said: India's Prime Minister Narendra Modi just left the US. He is a great friend of mine, but I told him that 'you've not been treating us right'. India charges us 52 per cent, so we will charge them half of that - 27 per cent. 

 

Notably, Donald Trump’s reciprocal tariffs against India come in the backdrop of the US’ rising trade deficit with the country.

 

According to the United States Trade Representative, the US goods trade deficit with India was $45.7 billion in calendar year 2024, higher by 5.4 per cent over the trade deficit of $2.4 billion reported in CY-2023.

 

US imported goods from India worth $87.4 billion in 2024, up 4.5 per cent ($3.7 billion) from 2023. Including exports, the US total trade with India was worth $129.2 billion in 2024.

Trump Tariffs: Indian sectors hit and exempted

India exports tonnes of goods to the United States. Most of these sectors will be hit with a blanket reciprocal tariff of 27 per cent.  

India exports Meat, fish, and seafood; Processed food, sugar, and cocoa; Cereals, vegetables, fruits, and spices; Dairy products; Edible oils; Generic medicines, specialty drugs and other pharmaceutical products; Diamonds, gold, and silver; Electrical, telecom, and electronics; Chemicals (excluding pharma); Textiles, fabrics, yarn, and carpets; Rubber products, including tyres and belts; Ceramic, glass, and stone products; Footwear; and automobile and auto components to the US. 

Among these, the US has announced "exemptions to certain sectors from reciprocal tariffs". These include steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs (the tariffs imposed on Canada, Mexico, China); copper, pharmaceuticals, semiconductors, and lumber articles;  all articles that may become subject to future Section 232 tariffs; bullion; and energy and other certain minerals that are not available in the United States.