Donald Trump’s 26% tariff threatens India, how much it will lose, and which sectors will be hit hard?
India-U.S. bilateral trade is estimated to total US$129.2 billion in 2024. Washington’s exports are worth US$41.8 billion, while imports from India are worth US$87.4 billion. During this period, the U.S. trade deficit was $45.6 billion.
Donald Trump and Narendra Modi
Although U.S. President Donald Trump calls Prime Minister Narendra Modi a “dear friend” and announced a 26% “discount price”, it is most likely to hit the Indian economy. Not only will its exports to the United States be reduced, but India will also have to import more from the country. In addition, the overall reciprocity tariff regime could undermine supply chains and overall international trade situations, making India a dump. The Indian currency may fall further, the current account may expand, and the foreign exchange reserves may shrink. Unemployment may increase and the stock market may extend within the red zone.
India – US Bilateral Trade
India-U.S. bilateral trade is estimated to total US$129.2 billion in 2024. Although Washington exports are worth $41.8 billion, imports from India are worth $87.4 billion. During this period, the U.S. trade deficit was $45.6 billion.
India’s exports to the United States include medicines, telecommunications equipment, gemstones, petroleum products, gold jewelry and ready-made cotton clothing.
Electronics, gems and jewels
Washington imported nearly $14 billion in electronics and about $9 billion in gems and jewelry from India. The industry is most likely to be hit hard, as Indian companies have so far paid 0.41% tariffs on electronics, while gems and jewelry have already paid 2.12%. Now, they will have to cough up the 26% tariff.
If exports from these sectors are not lowered, India will have to pay up to $6.76 billion. Earlier, they paid $57.4 million in electronics and $190.8 million in gems and jewelry. India will pay $6.5118 billion to both projects.
Aluminum, car
The total tax payable rate for auto parts does not differ significantly, and the export of aluminum is a 25% tariff, which have been announced.
Drugs, energy
India exports medicines and energy equipment worth $9 billion. However, these departments will not be affected, as the executive order previously signed by Donald Trump exempts them from the new tariff structure.
Copper, semiconductor, precious metals
In addition to copper, medicines, semiconductors and wood, gold and silver are exempted.
agriculture
India could be hit hard in the agricultural sector. Indian agricultural products are the highest in the world, ranging from 113.1% to 300%. In addition, the government provides subsidies for farmers, credit subsidies, debt forgiveness, crop insurance, and subsidies for inputs such as fertilizers, fuels, electricity and seeds. There are also non-bombers.
The United States has been urging India to struggle to eliminate non-tariff barriers and cut subsidies and other incentives. It also calls for tariff cuts. If India agrees to accept a small portion of the U.S. demand, it could flood wheat, corn, soy, poultry, dairy and fruit. It may really be hard to impress farmers.
Talk about BTA
Talent Secretary Scott Bessent said that if the tariffs are “not panic”, these tariffs would be limits on high tariffs.
It can be explained that Washington can further raise tariffs if countries react and retaliate.
India has another advantage because it will soon have a dialogue with the U.S. Trade Representative on the Bilateral Trade Agreement (BTA) and can resolve controversial issues of mutual tariffs and discuss them on a case-by-case basis with as many discounts as possible.
