President Trump plans to impose reciprocal tariffs starting April 2, asserting they will bolster U.S. wealth and job creation. India faces challenges from these tariffs and is considering reducing its duties on various imports to avoid negative impacts. While direct effects on India may be limited, global economic uncertainties could hinder overall growth.
On April 2, President Trump plans to implement reciprocal tariffs, stating, “Whatever they tax us, we will tax them.” He highlighted a historical disparity where the U.S. has charged lower tariffs than other nations, asserting that the tariffs could generate trillions in revenue and create numerous jobs, aiming to “make America rich again.” Trump emphasized that the U.S. will no longer be taken advantage of, claiming, “We’ve been ripped off for decades by every country on Earth, and we will not let that happen any longer.”
Since taking office, Trump has enacted tariffs on approximately $1.4 trillion worth of U.S. imports from Canada, Mexico, and China, leading to countermeasures that have rattled financial markets. India faces substantial risk from announced steel and aluminum tariffs of 25%, which may lead to a surge of cheaper steel imports from other nations. In response, Indian officials are seeking ways to reduce tariffs on various imports to cushion against potential U.S. levies.
Indian officials intend to lower tariffs on automobiles, chemicals, pharmaceuticals, and electronics, beyond recent cuts on high-end motorcycles and bourbon whiskey. The objective is to expedite a trade agreement with the U.S. by the fall, as discussed during the Modi-Trump summit. Additionally, Indian Trade Minister Piyush Goyal is visiting the U.S. for talks to clarify the expected impact of tariffs and negotiate a deal that could mitigate the economic fallout.
Negotiations are expected to focus on industrial products; however, India will resist cutting agricultural tariffs due to potential adverse effects on farmers. Having already lowered tariffs on select imports, India is prepared to continue discussions to ease trade tensions. Analysts suggest that sectors like chemicals, metal products, and jewelry are particularly susceptible to U.S. tariffs, with broader ramifications for agricultural exports if tariffs extend to farming goods.
Despite the potential for direct impacts, some economists argue that the overall impact of U.S. tariffs is limited concerning India’s economy. Swaminathan Aiyar stated, “Very little… because India is hardly on the radar screen,” indicating that major players like China and Russia are Trump’s primary targets. He emphasized that uncertainty in global markets, resulting from trade tensions, could hinder economic growth not only in India but globally.
The ongoing trade war and geopolitical tensions are expected to diminish investment and consumption worldwide, necessitating caution in economic planning on all fronts. As uncertainty mounts, stakeholders are advised to approach business decisions with careful consideration of the shifting trade landscape.
President Trump’s upcoming reciprocal tariffs on April 2 aim to generate substantial revenue and safeguard U.S. interests while affecting India and other trading partners. India is actively seeking to mitigate potential tariffs through import duty reductions and ongoing trade discussions with the U.S. While direct impacts on India’s economy may be minimal, the broader effects of global trade uncertainty pose a risk to growth. As the situation evolves, both countries are navigating a complex trade environment that requires strategic responses.
Original Source: m.economictimes.com
