'Mixed bag, not setback': Govt analysing impact of 26% Trump tariffs
New Delhi, Apr 3, 2025
US-India trade talks continue as India assesses the impact of the tariffs imposed by the Trump administration on Indian imports
The Indian government is evaluating the economic impact of a 26 per cent reciprocal tariff imposed by the United States, a senior official from the commerce ministry confirmed with PTI on Thursday. The move, announced by US President Donald Trump, is part of a broader tariff policy targeting countries that impose higher duties on American exports.
According to the official, the first phase of a universal 10 per cent tariff will take effect on all imports into the US starting April 5. The remaining 16 per cent, which will bring the total duty to 26 per cent for India, is scheduled to be enforced from April 10.
"The ministry is analysing the impact of the announced tariffs... It is a mixed bag and not a setback for India," the official stated, noting that there is scope for negotiation. The Trump administration has indicated that if a country addresses the US’s trade concerns, the duties could be revised in its favour.
India-US bilateral trade agreement
Leading up to Trump's announcement, the Indian government set up a control room, with senior ministry officials closely monitoring and tracking developments.
India had sought an exemption ahead of the tariff decision, with Commerce Minister Piyush Goyal visiting Washington DC last month for talks on a bilateral trade agreement. The visit aimed to address the potential tariff hike and strengthen economic ties.
India and the US are currently negotiating a bilateral trade agreement, with both sides aiming to finalise the first phase of the deal by fall (September-October) this year. The official's statement suggests that diplomatic discussions could mitigate some of the adverse effects of the tariffs.
India had already taken steps to address US concerns, including reducing customs duties in the Union Budget on February 1. This lowered peak import tariffs to 70 per cent from 150 per cent, with average tariffs dropping to below 11 per cent from 13 per cent.
Trump scrutinises India’s trade policies
US President Donald Trump announced the tariffs on Thursday morning (IST), declaring April 2 as "Liberation Day".
“This is Liberation Day, a long-awaited moment. 2nd April 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. We are going to make it wealthy, good, and wealthy,” Trump announced.
Trump unveiled a chart listing the tariff rates imposed by various nations on US goods, juxtaposed with the new reciprocal tariffs these countries would now face.
Trump specifically called out India’s trade policies, stating, “India, very, very tough. Very, very tough. The prime minister just left. He’s a great friend of mine, but I said, you’re a friend of mine, but you’re not treating us right. They charge us 52 per cent."
The chart suggested that India levies a 52 per cent tariff on American goods, including trade barriers and currency valuation factors. In response, the US has set India’s reciprocal tariff at a "discounted" rate of 26 per cent.
[The Business Standard]
