 "New German cars are stored at a logistic centre in Duisburg, Germany. AP")
India is considering reducing or even ending customs duties on US automobile parts to blunt the effect of US President Donald Trump’s automobile tariffs.
Last week, Trump announced 25 per cent tariffs on all automobiles. The tariffs will come into effect on April 2 — the same date he is expected to start rolling out reciprocal tariffs. Trump has repeatedly singled out India while talking about tariffs. His sectoral tariffs as well as reciprocal tariffs in the making, in the absence of a broader understanding, may hit India hard.
To blunt the effect from Trump’s automobile tariffs, India is considering reducing or even ending customs duties on imported US auto part, which currently ranges from 10 to 15 per cent, according to The Economic Times.
“There is consensus that the domestic industry will not be impacted by imported US auto components,” an official told ET.
The idea driving the approach is that high-cost US parts would not be able to replace cheaper India-made parts even if duties are eliminated, according to the newspaper.
It is part of the broader approach where India is considering reducing duties on products that India exports to the United States in large quantities but does import at scale. India exports around $7 billion worth of auto parts to the United States but imports auto parts worth just around $1.5 billion.
The newspaper further reported that Indian and US officials have have so far discussed auto parts and not vehicles in their discussions. The two sides are currently engaged in talks to reach a bilateral trade agreement to reach a middle ground in the midst of Trump’s tariff war on the world.
Impact Shorts
View AllIndia has conveyed to the United States that outstanding issues in trade should be addressed by the trade deal in the making and not by tariffs, according to the newspaper.
A person aware of the matter was quoted as saying that India has argued that as the two sides are engaged in trade talks, there is no requirement of hitting India with reciprocal tariffs set to be rolled out starting April 2.