Trump's tariff strike: India hit with 26% duty as the trade war escalates

Copyright © HT Digital Streams Limit all rights reserved. US President Donald Trump remarks on rates in the Rose Garden in the White House on April 2. (Reuters) Summary Trump’s trade war has subjected India to a 26% tariff on export to the US, causing concerns about trade relations between India and its largest export destination. Continuous negotiations for a bilateral trade agreement in India have now become more important to reduce the impact of rates. New -Delhi: While US President Donald Trump sparked his worldwide tariff war from the White House, India found itself with a new regime that did not stop full reciprocity, but still holds substantial trade barriers. With Trump charging half of the rates imposing a country on US imports, Indian exports to the US have a 26% tariff. It is based on Trump’s claim that India charges a 52% cumulative tariff on US goods. The US is the largest export market in India. (The White House Schedule to the Rates mentions a 27% charge for India, although Trump, in his speech, called a 26% tariff.) However, more trade measures are expected, as set out in the White House fact state. A 10% tariff on all imports will come into effect on April 5, and from April 9, countries with the largest trade shortages with the US will face even higher reciprocal rates. According to the White House statement, the rates will remain in effect until Trump determines that any trade deficit and underlying non-recurring policy has been addressed. However, his order provides for amendments, which means Trump can increase rates in response to any retaliation or lower rates as a trading partner take steps to align with US economic and security interests. India’s weighted average rate has already dropped from 17% in 2023 to 10.66% after the tax cuts announced in the Union budget for 2025-26. Read also | Trump tariffs: The US president hits India with a 26% tariff – how could it affect the experts of the stock market trading in India, although the export of India will be influenced by US rates, the country was relatively better than some of its most important competitors. However, they have warned that prolonged uncertainty could dampen the trade sentiment, which could make the early closing of India and US negotiations for a bilateral trade agreement that is very important for stability. “We have to judge the impact, but when we look at the reciprocal rates imposed on other countries, we are in a lower band. We are much better placed compared to our most important competitors such as Vietnam, China, Indonesia and Myanmar,” said Ajay Sahai, director general of the Federation of Indian Export Organizations. “Hope the BTA concludes early to relieve reciprocal rates. In some sectors, since our competitors are worse, we can also benefit,” Sahai told Mint shortly after the announcement of Trump’s reciprocal tariff plan. Read also | The Great Escape: As investors abandon us for greener pastures, Indian shares “will not benefit fully” Trump “, citing April 2 as ‘Liberation Day’, the tariff announcement from the Rose Garden of the White House in front of an audience of steel and car workers. He calls the decision a ‘statement of economic independence’ and one of the most important moments in American history, claiming that the rates ‘trillions and trillions of dollars’ would produce to lower taxes and pay the US national debt. “We’ll have them about half of what they are and charged,” Trump said, explaining his reciprocal tariff plan. “The rates will therefore not be completely reciprocal.” However, he made it clear that the halved figure was responsible for “the combined rate of all their rates, non-monetary barriers and other forms of fraud”. Trump has offered a large card in which the reciprocal rates are imposed on different countries. The map, with countries such as China, Vietnam, Japan, India and Switzerland, as well as the European Union, compared to rates and other trade costs placed on US imports at the reciprocal rates that will now come into effect. Read also | In maps: Why Donald Trump thinks the US is ripping off the eyes of the Indian bilateral trade agreement, the US 26% tariff on India comes amid continued trade negotiations between the two countries to finalize a bilateral trade agreement. “In the run -up to today’s announcement, there was widespread recognition that India’s import restrictions would be one of the most important targets,” said Richard M. Rossow, chairman of India and emerging Asia at the Center for Strategic and International Studies, a thinking tank in Washington. ‘But it seems that the two parties are moving rapidly with the negotiation of a trade agreement that could meaningfully reduce the impact. Considering how important the US is for Indian exporters, both parties will want to do quickly. ‘ Other experts said capital flow to India could be influenced by Trump’s reciprocal rates. “It cannot be considered a one-time event, given the uncertainty about future measures by the US administration and any tit-for-tat by other countries,” said Sachchidanand Shukla, Group Chief Economist at Larsen & Toubro. “The biggest impact on India can be through the channel of capital flow, services and Indian rupee exports more than trading, as India is a major importer of foreign capital and overpayers and exporter of IT/ITES services.” Read also | How Trump World poses problems for the technical firms of India, other than information technology and IT activated services, the most important exports of India to US clothing, engineering goods, electronics, pharmaceuticals and jewelry and jewelry. These sectors together made up 72.7% of total goods trade between the two countries in FY24, which contributed $ 56.34 billion from the total bilateral trade of $ 77.52 billion. Sectors such as semiconductors, furniture and rubber – although smaller in volume – are also very dependent on US demand, with semiconductors especially exposed as 85% of India’s exports in this category, are destined for the US. India has already revised the import tariffs on various US products to address US trading problems. The import tax on bourbon -whiskey was reduced from 150% to 100%. Rates on Harley-Davidson motorcycles were reduced from 50% to 30%, and the Ethernet switches service was halved from 20% to 10%. ‘The announcement of a’ discounted ‘reciprocal rate of 26% on Indian exports by the US can push India to reconsider its own tariff structures and accelerate trade negotiations, while driving the exporters to diversify markets and upgrade value chains,’ says Sunil Kharbanda, co-founder and main revenue, Trezix, a software-as-Service For enterprises that enter imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of imports and implementation of the import and import and implementation of imports and imports and imports and imports the import and execution of the business. Read also | Did India-American trade talks darken Trump’s threat to reciprocal rates? Trump contributed a full -fledged trade war to the renovation of the trade, and confirmed that a 25% tariff on foreign -manufactured cars, announced last week, will come into effect on April 2 at midnight ET (09:30 on April 3). A full -fledged tariff war is expected to hit global economic and trading growth, with the Organization for Economic Cooperation and Development (OECD) last month, which expressed concern about the further fragmentation of the global economy. The Paris-based grouping of developed and developing countries said in March in its ‘Economic Outlook-Tus-Tus-Report’ that it expects the global GDP growth of 3.2% to be in 2024 to 3.1% in 2025 and 3.0% in 2026, due to higher trading barriers in various G20 economies and increased policy views and increased policy views. Read also | The Rate Time Line: How Trump 2.0 policy reforms the global trade, captures all business news, market news, news reports and latest news updates on live mint. Download the Mint News app to get daily market updates. More Topics #india Exports Mint Specials