Starting on April 2, US President Donald Trump plans to impose reciprocal tariffs on trading partners, a move that could impact India’s exports significantly. According to Emkay Global, India could lose $7 billion annually if the tariffs are set at 10% and a staggering $31 billion if the rate rises to 25%. As Trump prepares to implement this policy, there is growing concern over the impact on sectors like pharmaceuticals, gems and jewellery, automobiles, and food products, which are major export categories for India.
While these tariffs will affect a wide range of US trading partners, India, along with South Korea and Thailand, is identified as one of the most vulnerable countries. India’s current average tariff on US exports stands at 9.5%, one of the highest in the world, making it susceptible to these new trade barriers. The US government has stated that the tariffs could raise up to $600 billion annually, with an average tariff of 20%, although economists warn that this could harm the US economy.
In response, India is exploring options to reduce or eliminate duties on US auto parts, a key focus in ongoing trade negotiations. Additionally, India has expressed willingness to lower tariffs on American imports as part of a bilateral trade agreement that has been under discussion since Prime Minister Narendra Modi’s visit to the US. This deal could help balance the trade deficit, which currently stands at $45.6 billion in the US’s favor.
Both governments are working towards a mutually beneficial trade deal, with Union Minister Piyush Goyal emphasizing that discussions are progressing well. However, much remains uncertain about how these tariffs will be fully implemented and what the final impact on India’s economy will be.
