 "Trump threatens India with reciprocal tariffs: Which imported US goods does he have a problem with?")
American President Donald Trump threatened India with reciprocal tariffs during his joint address to the US Congress on Tuesday (March 4) night. His remarks come amid the US’ trade war with Mexico, China and Canada.
Trump, who has targeted India over high tariffs on American imports many times, said in his speech, “If you don’t make your product in America… under the Trump administration, you will pay a tariff, and in some cases, a rather large one. Other countries have used tariffs against us for decades, and now it’s our turn to start using them against those other countries. On average, the European Union (EU), China, Brazil, India, Mexico and Canada, have you heard of them? And countless other nations charge us tremendously higher tariffs than we charge them. It’s very unfair. India charges US auto tariffs higher than 100 per cent.”
He announced that the US will impose reciprocal tariffs on countries that charge high duties on American goods on April 2.
“Other countries have used tariffs against us for decades, and now it’s our turn,” Trump said. “Whatever they tariff us, we will tariff them. Whatever they tax us, we will tax them. If they use non-monetary barriers to keep us out of their market, we will do the same.”
Let’s take a closer look.
India’s imports from US
America exports crude oil and related products, gems and stones, nuclear reactors and electrical and medical equipment to India.
US exports to India touched $42.19 billion in 2023-24, a jump from $35.81 billion in 2019-20. Mineral fuels accounted for the largest part of these American exports, followed by precious and semi-precious stones, nuclear reactors, electrical machinery, and aircraft and parts.
While India does not levy high taxes on the top 30 items imported from the US, it imposes high basic customs duty (BCD) on luxurious cars and motor vehicles.
New Delhi has, however, slashed these rates in the Union Budget.
Meanwhile, India exports to the US include pearls, semi-precious stones, pharmaceutical products and electrical equipment.
What are reciprocal tariffs?
Tariffs are taxes charged on goods imported from other countries. Reciprocal tariffs are the duties on imported goods that the US wants to levy against its global trading partners equal to the existing rates imposed by those countries on items imported from America.
Trump believes the US has been treated unfairly in global trade. Through reciprocal tariffs, the US president aims to reduce the country’s trade deficit, boosting his “America First” approach.
The US has a $45.6 billion trade deficit with India, making it one of the key targets of Trump’s reciprocal tariffs.
How India is trying to avert Trump’s tariffs
India has already taken steps to avert Trump’s reciprocal tariffs. As part of the Union Budget, the Narendra Modi-led government reduced import duties on several US goods. This included slashing import duty on some Harley-Davidson motorcycles, from 50 per cent to 40 per cent, and 100 per cent on bourbon whiskey from 150 per cent.
Dubbing India’s tariffs on imported American goods a “big problem”, Trump said earlier this month at a joint press conference with Prime Minister Narendra Modi at the White House that the US sales of oil and gas will bridge the country’s trade deficit with India.
“We want a certain level playing field, which we really think we’re entitled to, and he does also, in fairness. So we’re going to work on that very hard, and we can make up the difference very easily with the deficit, with the sale of oil and gas, LNG, of which we have more than anybody in the world,” Trump said.
The US president said the two countries have decided to make America “a leading supplier of oil and gas to India”. New Delhi also agreed to buy F-35 fighter jets from the US, firming up defence cooperation.
On Monday, Commerce Minister Piyush Goyal left for the US for trade talks. A government source told Reuters that he will seek clarity on America’s reciprocal tariffs to analyse their impact on India.
Goyal is likely to discuss potential Indian concessions and a trade deal to cut tariffs and enhance bilateral trade.
New Delhi is expecting to finalise the first part of a trade deal with the Trump administration by the fall, hoping it would protect India from reciprocal tariffs. India and the US are aiming for a bilateral trade worth $500 billion by 2030.
According to Bloomberg sources, Indian officials are looking for ways to cut tariffs on a wide range of American imports, including cars and chemicals.
As per Reuters, while India is open to discussing reducing tariffs on industrial products, including automobiles and chemicals, but is hesitant about lowering tariffs on agricultural products.
With inputs from agencies
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