President Trump’s reciprocal tariffs set to start April 2 could cost India $7 billion yearly. India’s trade sector may face hefty impacts, especially in chemicals, metals, and agriculture. The tariffs arise from perceived trade imbalances, with India’s tariffs on US goods outpacing those imposed by the US on Indian imports. India’s government is negotiating to safeguard its export interests amidst these shifts.
On April 2, President Trump plans to impose reciprocal tariffs affecting India, potentially costing the nation $7 billion annually. This decision responds to perceived unfair trade practices where countries like India charge US imports substantially higher tariffs compared to the US rates on Indian goods. Trump emphasized that India imposes auto tariffs exceeding 100%, further highlighting the inequity in trade terms.
The Trump administration’s tariffs are already directed at Canada, Mexico, and China, but India has remained unaffected until now. Analysts predict that if the US enforces these tariffs, sectors vulnerable to the increases include chemicals, metals, and automotive products. It is estimated that the tariffs could impact approximately $74 billion in Indian exports to the US in 2024, which include high-value goods such as pharmaceuticals and jewellery.
Financial analysts, including those from Citi Research, suggest that India’s exports could decrease by $7 billion annually due to these tariffs. This scenario reflects ongoing tensions and could have broader implications for India’s overall economic health. To mitigate this impact, the Indian government is in discussions to potentially adjust its own tariffs in various sectors.
Furthermore, trade experts indicate that the overall tariff differential, which is currently around 7 percentage points, poses significant risks to India as the US trade policies evolve. The possibility of tariffs being applied to agricultural exports is particularly concerning, as these sectors would be hardest hit for their higher tariff differentials against US goods.
In a bid to shield the Indian economy from the looming tariffs, India’s Trade Minister Piyush Goyal met with US trade representatives. The goal of this engagement is to negotiate terms that keep trade flowing while addressing the tariff concerns. Despite making concessions on certain items, India is wary of lowering agricultural tariffs, as it could jeopardize local farmers and the agricultural sector’s stability.
In summary, Trump’s impending April 2 tariffs may significantly affect India’s trade dynamics, potentially resulting in losses estimated around $7 billion annually. The government is actively engaging in discussions to mitigate these risks, seeking equitable trade terms while maintaining protections for sensitive domestic sectors. The negotiations could shape future trade relations between the US and India, particularly in light of ongoing tariff disparities.
Original Source: m.economictimes.com
