Donald Trumps Reciprocal Tariff Might Influence India If Imposed On Sectors: Commerce Consultants

Trump’s Reciprocal Tariff: The impression of the proposed reciprocal tariffs by america on India will rely on how the coverage is implemented–whether on a sectoral foundation or a product-specific foundation.

Commerce consultants counsel that there’s nonetheless no readability on the principles and circumstances of this tariff coverage, which has been extensively mentioned since US President Donald Trump first talked about it. One of many key questions is whether or not the Reciprocal Tariffs will apply solely to merchandise the place the US has an curiosity or if will probably be a broader, bilateral measure. 

This distinction is necessary, as it can decide how a lot India’s exports can be affected.For instance, if the US raises tariffs on pistachios to 10 per cent to match India’s current charge, it can don’t have any impression on India for the reason that nation doesn’t export pistachios. 

President Trump’s tariffs fall into 3 buckets: (i) border safety; (ii) geopolitics; and (iii) equity. Every bucket by itself is negotiable, with tariffs nearly leverage. Reciprocal tariffs fall into the equity bucket and are negotiable. Solely China is non-negotiable… pic.twitter.com/jC0k7I2Gq0
— Robin Brooks (@robin_j_brooks) February 14, 2025

This case applies to a number of different merchandise as effectively. Moreover, for 75 per cent of US exports to India, the typical tariff is already beneath 5 per cent, which implies that selectively rising tariffs is probably not an efficient technique for the US.

Nonetheless, if the coverage is utilized sector-wide, the impression on India could possibly be totally different. The U.S. presently imposes excessive tariffs of 15-35 per cent on Indian labor-intensive exports equivalent to textiles, clothes, and footwear.

Consultants counsel that if India negotiates a tariff discount settlement, it may benefit from decrease U.S. tariffs on these merchandise, making Indian exports extra aggressive.

Ajay Srivastava, Founding father of the International Commerce Analysis Initiative, defined the state of affairs to ANI, stating that if the U.S. applies tariffs primarily based on particular person merchandise, India could not face main challenges since Indian and U.S. exports don’t immediately compete.He gave an instance: “If the U.S. imposes excessive tariffs on Indian avocados in response to India’s tariffs, it will not have an effect on India, as India doesn’t export avocados.

“Nonetheless, he warned that if tariffs are imposed primarily based on sector-wide averages, Indian exports could possibly be impacted. Whereas the U.S. doesn’t export many agricultural merchandise to India, it may enhance tariffs on Indian agricultural exports primarily based on a median calculation. 

This transfer may hurt a number of Indian merchandise and power India to both reduce its personal tariffs or undertake retaliatory measures. He stated “U.S. doesn’t export many agricultural merchandise to India, making use of larger common tariffs on Indian agriculture exports may hurt many merchandise. This could power India to contemplate tariff cuts or a retaliation technique. However, in labor-intensive industries, India would possibly profit from this method”.

As the main points of the reciprocal tariff coverage stay unsure, commerce analysts imagine that India might want to rigorously assess its response to make sure minimal disruption to its exports whereas defending its commerce pursuits.