Modi-Trump assembly: Reciprocal tariffs by U.S. could not harm India a lot says GTRI

Prime Minister Narendra Modi and U.S. President Donald Trump shake arms as they ship a joint press assertion after their assembly on the White Home, in Washington, DC on Thursday, February 13, 2025
| Picture Credit score: Reuters

The U.S. authorities’s transfer to impose reciprocal tariffs to match greater duties levied by its buying and selling companions shouldn’t be prone to harm India a lot as there are variations within the export profiles of the 2 nations, financial assume tank GTRI stated on Friday (February 14, 2025).

Citing an instance, the International Commerce Analysis Initiative (GTRI) stated that if the U.S. prices 50% reciprocal tariffs on Indian pistachios as a result of India prices the identical, India is blissful because it doesn’t export pistachios.

Moreover, for 75% worth of the U.S. exports to India, the common tariff is lower than 5%, GTRI Founder Ajay Srivastava stated.

In distinction, India faces excessive U.S. tariffs on many labour-intensive items like textiles, clothes, and footwear, ranging between 15-35% on a number of merchandise, he added.

“Given the variations within the export profiles of the 2 nations, reciprocal tariffs could not have a big influence…Within the new Trump period, India could wait to see the US choice in April on reciprocal tariffs after which reply in equal measures as we did in June 2019,” Mr. Srivastava stated.

After talks with Prime Minister Narendra Modi in Washington, U.S. President Donald Trump introduced that India will purchase extra oil, gasoline and army {hardware} from America to convey down the commerce deficit however asserted that Washington is not going to spare New Delhi from reciprocal tariffs.

On the commerce deal, he stated although the main points aren’t but clear, it might be a restricted deal on reciprocal tariffs, anticipated to be introduced in April.

The U.S. has already introduced non-reciprocal tariffs of 25% on metal and aluminium.

“That is additionally not one of the best time for an FTA (free commerce settlement) or full commerce settlement because the U.S. doesn’t respect FTAs. An instance is how the Trump administration has imposed tariffs on Mexico and Canada on metal and aluminium in violation of USMCA (US Mexico Canada) provisions,” Mr. Srivastava stated.

The GTRI additionally stated that the U.S. shouldn’t be clear if the reciprocal tariff applies to particular merchandise or whole sectors.

A White Home reality sheet dated February 13 stated, “The U.S. common utilized Most Favored Nation (MFN) tariff on agricultural items is 5%. However India’s common utilized MFN tariff is 39%. India additionally prices a 100% tariff on U.S. bikes, whereas we solely cost a 2.4% tariff on Indian bikes.” On this, Mr. Srivastava stated that the U.S. should select a standards – product or sector – for clear choice making, else all of the US efforts on MFN tariff cuts will find yourself benefiting China as China is the most important international provider of business items.

Throughout April-November 2024-25, the U.S. was the second largest buying and selling accomplice of India with $82.52 billion bilateral commerce in items ($52.89 billion price of exports, $29.63 billion of imports and $23.26 billion commerce surplus).

Throughout 2021-24, America was the most important buying and selling accomplice of India. The U.S. is without doubt one of the few nations with which India has a commerce surplus.

In 2023-24, the U.S. was the most important buying and selling accomplice of India with $119.71 billion bilateral commerce in items ($77.51 billion price of exports, $42.19 billion of imports and $35.31 billion commerce surplus).