Barclay’s report dissects Indo-US commerce and tariff negotiations
Mar 28, 2025 09:15 PM IST
A report by Barclay’s Chief India Economist Aastha Gudwani analysed Indo-US commerce and means that India may take a cluster-wise strategy to the negotiations
NEW DELHI: With days left earlier than US President Donald Trump pronounces reciprocal tariffs on April 2, Indo-US commerce negotiations proceed to happen. Will India drastically carry down its tariffs to handle Donald Trump’s criticism of Indian tariffs being too excessive? Will the reductions be throughout the board or commodity particular? A report launched by Barclay’s Chief India Economist Aastha Gudwani has analysed Indo-US commerce intimately and means that India may take a cluster-wise strategy to the negotiations.
US’s commerce deficit with India has elevated considerably, however it’s nonetheless comparatively small in comparison with others
Information from US Bureau of Financial Evaluation (BES) exhibits that US’s commerce deficit with India was rising constantly between 1999 and early 2010s after which it has stabilised. India’s share in US’s complete items and providers commerce deficit elevated from lower than 2% within the 2000s to succeed in a peak of greater than 6% within the early 2010s however has stabilised at round 5% within the 2020s. To make sure, India continues to be a small participant so far as US’s total commerce deficit in involved. US’s commerce deficit of $ 46.1 billion with India was simply 5.02% of its total commerce deficit in 2024.
However India imposes one of many highest tariffs on US imports regardless of dealing with decrease tariffs within the US
The Barclays report exhibits that in comparison with different nations in South East Asia, India imposes a lot larger tariffs on merchandise imported from the US. Not solely that, India’s tariffs on US imports can also be a lot larger than tariffs that the US imposes on Indian exports. This distinction is far decrease for Thailand, Philippines, Taiwan, Vietnam and different nations.
Nonetheless, the Indo-US tariff distinction isn’t the identical throughout items
That is an important evaluation within the Barclay’s report. It has appeared on the distinction between tariffs imposed by India and US on particular items in line with their significance in India’s export basket to the US. The distinction is critical (ten share factors) for a few of India’s most essential exports to the US comparable to pharma merchandise ($6.5 billion) and gems and jewelry ($5.9 billion), very excessive for exports of comparatively decrease significance and never so important for some commodities comparable to petroleum merchandise.
The report makes use of this knowledge together with India’s bargaining power – a operate of whether or not or not India is an enormous provider of those merchandise – to categorise India’s exports into 4 classes from India not needing to barter from the US to discovering it tough to barter. For merchandise by which India is the highest exporter to the US, India might not want to barter in any respect and will have the best bargaining energy. Merchandise within the ‘comparatively simple to barter’ class are these for which India is the second largest exporter, the place India nonetheless has comparatively excessive bargaining energy. Merchandise for which India is the third largest exporter are reasonably tough to barter and India might have low bargaining energy. The ultimate class is one the place India will discover it ‘tough to barter’ the place India isn’t among the many high three suppliers for the US. These are the merchandise that are at most threat of dealing with reciprocal tariffs, as per the report.
