Will Donald Trump impose tariffs on India after Mexico, China and Canada?

Donald Trump is nearly two months away from being inaugurated as the 47th US president. However, fears around his presidency are already swirling around the world, especially when it comes to his plan of reintroducing tariffs on trading partners.

On Monday (November 25), Trump promised massive hikes in tariffs on goods coming from Mexico, Canada and China starting on the first day of his administration. The move, he said, was retaliation for illegal immigration and “crime and drugs” coming across the border.

These countries, in turn, have also threatened to retaliate with their own tariffs against the US.

Trump’s threats of tariffs also have India worried. But it is still unsure if the US president-elect will spare New Delhi? Here’s what we know so far.

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What are Trump’s tariff plans?

On Monday, Trump said that one of his first moves on becoming US president on January 20 would be signing an executive order, introducing tax on all products entering the country from Canada, Mexico and China.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25 per cent tariff on all products coming into the United States, and its ridiculous open borders,” Trump posted on his Truth Social platform. “This tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!”

Trump also announced that China will face higher tariffs on its goods – by 10 per cent above any existing tariffs – until it prevents the flow of illegal drugs into the United States. “I have had many talks with China about the massive amounts of drugs, in particular fentanyl, being sent into the United States – but to no avail,” Trump posted on Truth Social.

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The announcement is in line with what Trump had promised during his campaign trail. During electioneering, he promised to use US economic muscle as leverage on issues having little to do with trade — namely his claim that the United States is under siege by foreign crime and dangerous migrants.

How have China, Mexico, and Canada reacted?

Trump’s decision to levy these tariffs has not been received well by the three countries. Mexico President Claudia Sheinbaum held a press conference on Tuesday (November 26), in which she said that she planned to send Trump a letter highlighting the importance of their two countries working together.

Sheinbaum warned that the imposition of tariffs would lead to more tariffs, inflation and job losses “until we put our common businesses at risk”.

She added, “What sense is there?”, underscoring that high tariffs would hit US carmakers with plants in Mexico, such as General Motors and Ford particularly hard.

Canada’s Prime Minister Justin Trudeau also said that he had spoken to Trump in a phone call. “We talked about some of the challenges that we can work on together. It was a good call,” Trudeau said. “This is a relationship that we know takes a certain amount of working on, and that’s what we’ll do.”

Later, speaking in the House of Commons in Ottawa, Trudeau told lawmakers that “the idea of going to war with the United States isn’t what anyone wants”. He called on them to not “panic”, and to work together.

Meanwhile, China warned that “no one will win a trade war”. Chinese Embassy spokesperson Liu Pengyu said his country has been in communication with the US about counternarcotics operations and that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”

“About the issue of US tariffs on China, China believes that China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war,” Liu said in a statement.

Is India next in Trump’s tariffs war?

Trump’s threats of imposing tariffs once he’s president has raised concerns for India, which shares major trade ties with Washington. So far, he hasn’t included India in his tariff plans. However, it isn’t clear whether the US president-elect will levy additional taxes on New Delhi.

However, his statements during the election campaign are worrying. In September, Trump referred to India as a “very big abuser” in terms of import tariffs. Speaking in Flint, Michigan, Trump said, “So when India, which is a very big abuser… These people are the sharpest people. They’re not a little bit backwards… You know the expression, they’re at the top of their game, and they use it against us. But India is very tough. Brazil is very tough…. China is the toughest of all, but we were taking care of China with the tariffs.”

Earlier too, in 2019, Trump labelled India a “tariff king”. He said, “I got a call from Prime Minister Modi of India. They are one of the highest-taxing nations in the world. They taxed us 100 per cent… They charge us 100 per cent tariffs on goods. So they send a motorcycle – and they make a lot of them – Indian cycles. They send them to our country, we charge them nothing. We send a Harley Davidson to India and they charge us 100 per cent.”

It was also during Trump’s last stint as US president that he terminated India’s preferential trade status. He had removed India from the preferential trade programme, known as the Generalised System of Preferences, which gives developing countries easier access to the US market and lowers US duties on their exports.

What would be the impact if Trump levied tariffs on India?

While Trump hasn’t imposed any tariffs yet on India, experts predict that they might be imposed for goods like automobiles, textiles and pharmaceuticals.

Global Trade Research Initiative (GTRI) founder Ajay Srivastava warned that Trump’s America First agenda may result in reciprocal tariffs on Indian goods, especially on exports like automobiles, wines, textiles, and pharmaceuticals.

He added that India should prepare for possible measures affecting IT exports.

Agneshwar Sen, Partner-Tax and Economic Policy (International Trade), EY also opined that India could face higher tariffs on exports like textiles, chemicals, pharma and auto/engineering products.

With inputs from agencies