Trump imposes 26% reciprocal tariff on Indian exports

US President Donald Trump has announced “discounted” reciprocal tariffs of 26 per cent on India which could affect exports from several sectors, such as textiles, chemicals, gems & jewellery, machinery, electronics, auto parts, and electricals.

However, reciprocal tariffs announced on some of India’s competitors, such as China, Vietnam, Bangladesh, Indonesia, and Cambodia, are higher, which could give an edge to Indian exporters against suppliers from these countries. 

Trump’s `Liberation Day’ tariff announcement, made from the White House Rose Garden on Wednesday evening (early Thursday morning in India), also included confirmation of a 25 per cent levy on vehicles not assembled in the US, effective April 3, and a baseline tariff of 10 per cent on all exports from all countries.

Elaborating on India, Trump remarked that the situation was very, very tough. “The PM, he just left, is a great friend of mine. I told him you are a great friend of mine but you have not been treating us right. They charge us 52 per cent..,” Trump said while announcing the US’ new tariff plans from the White House Rose Garden on Wednesday evening (early Thursday morning in India).

Trump said his government was being kind to its trade partners and was charging them half of what they were charging the US. “We will calculate combined rates of all tariffs, including non-tariff barriers, and charge them approximately half of what they have been charging us,” he said.

Per calculations made by the US government, India charges 52 per cent tariffs on US goods, which attracts a 26 per cent reciprocal tariff.

Other countries on which the US imposed substantial reciprocal tariffs include China at 34 per cent, the EU at 20 per cent, Vietnam at 46 per cent, Taiwan at 32 per cent, Japan at 24 per cent, Cambodia at 49 per cent, Bangladesh at 37 per cent, Indonesia at 32 per cent, Malaysia at 24 per cent and South Africa at 30 per cent.

India hopes to convince the Trump government to bring down reciprocal tariffs imposed on its exports by lowering tariff and non- tariff barriers for American exporters as part of the bilateral trade agreement (BTA) being negotiated between the two countries.

Since the US is India’s largest trading partner and exporting country, with exports of goods at $77.51 billion and imports at $42.19 billion in FY24, it does not want to get into a tariff fight with the country.

The US wants India to slash tariffs on items such as automobiles, medical equipment, agricultural  produce, chemicals and alcohol and New Delhi is holding consultations with stakeholders to determine the extent to which that would be possible.

It would be particularly difficult for India to bring down tariffs on agricultural and dairy items as these are highly sensitive items.

Trump said that his reciprocal tariffs also defended the US farmers and ranchers.

“With today’s actions, we’re also standing up for our great farmers and ranchers who are brutalised by nations all over the world,” he said.

Apart from tariff reduction, the US has also been pressuring India to address non-tariff barriers such as import restrictions, quality control and sanitary & phytosanitary norms.

The BTA being negotiated by the two countries is expected to more than double bilateral trade to $500 billion by 2030 and its first tranche is expected in the Fall of 2025.