India faces a mutual tax of 27% from April 9, which is lower than its regional competitors, such as China (34%, except for the 20% imposed in two earlier rounds), Vietnam (46%) and Indonesia (32%).
“This is Liberation Day, it’s a long-awaited moment,” Trump said. Using the White House Rose Garden as the stage, announcing the rest of the world is frightening.
“April 2, 2025, with the day when the U.S. industry is reborn, the day of the U.S. fate, and the day we start making the U.S. rich again, will always be remembered.”
When his magazine base cheered, critics say he risked disrupting global growth and rampant inflation, putting the United States into recession. Global leaders criticized the tariffs, while China and the EU expressed opposition.
Global markets are struggling with concerns about retaliatory tariffs and global trade turmoil. India is “studying” the meaning of tariffs and is “studying opportunities for differential taxation from the state”, the government said in a statement. Officials who do not want to be identified told ET that India is not very satisfied with the tariffs, but is not too worried. “This is not India’s best expectation, but because it is a global trade policy, the United States cannot abandon any country,” one official said. “Hope we can navigate well. The industry understands that there can be pain.”
Marine products, machinery, medical equipment, and to a lesser extent gems and jewelry are affected by the latest tariffs. Pharmaceuticals are exempt, and exports to the United States were allowed in fiscal 24.
Trade protectionism is on the rise
Those tariffs on Indian products may soon be inappropriate if the country wants to reach a bilateral trade agreement (BTA) with the United States.
Stocks are leaping forward – Sensex fell 0.42%, while Nifty fell just 0.35%.
Economists say India’s expected 6.5% growth this year could be hit by a 30-60 basis point hit by Trump’s measures to reduce spillovers in global growth.
The United States imposed 10-57% tariffs on 57 countries, fulfilling his election commitments to complete the tasks he began in his first term. 33 of them face higher tariffs than India. Those countries that have not yet been subject to reciprocity tariffs are subject to a 10% tax.
Experts say the tariff calculation is based on each country’s trade deficit and imports, rather than the obligations imposed by the country.
The chart states that India has an average tariff rate of 52%, and the U.S.’s “discount” countdown is 26%. However, White House documents say India will assume an additional 27% of additional responsibilities.
“Uncertainty will spiral and trigger further protectionism. The consequences for millions of people around the world will be terrible,” said EU head Ursula von der Leyen.
Probably a relief from BTA
Officials say India already has an early advantage because it has been in 50 days of in-depth negotiations with the U.S. BTA and there are opportunities and challenges.
“Therefore, discussions are being held between India and the U.S. trade teams to quickly conclude mutually beneficial multisectoral bilateral trade agreements,” the Ministry of Industry and Commerce said in a statement. “The ongoing negotiations focus on enabling both countries to develop trade, investment and technology transfer. We are in touch with the Trump administration on these issues and look forward to pushing them to the next few days.”
India has reached negotiations with the United States and the two countries for a bilateral trade agreement to finalize the first phase of the agreement in the fall of this year (September to October) and aims to target $500 billion in bilateral trade in 2030 from the current $191 billion.
India’s trade surplus with the United States in fiscal 24 was US$35.32 billion.
SC Ralhan, president of the Federation of Export Organizations of India (FIEO), said early conclusions of the proposed BTA will help dilute the effects of tariffs.
Industry impact
India’s exports of shrimp, carpet, medical equipment and gold jewelry will face the brunt of the 27% additional import tariff announced by the United States.
Textiles and apparel, electronics, telecommunications, smartphones and electronics, semiconductors and pharmaceutical manufacturers may escalate as India’s competitors face higher reciprocity responsibilities.
The United States is the largest market in the Indian shrimp industry. The product is less competitive in the U.S. market due to tariffs relative to other exporting countries, such as Ecuador. The United States already has anti-dumping and counterattacking the Indian shrimp.
In carpet exports, India will lose to Türkiye.
Fieo said these responsibilities pose a challenge, but India takes over the challenge better than its competitors, as their goods will face higher taxes.
Gem and jewelry exporters say the tariffs are a major setback and urge the government to take steps to ensure the long-term interests of the industry.
Steel industry executives say India will become more vulnerable to low-cost imports as affected countries may ship them to local markets.
The Indian Medical Equipment Industry Association (Aimed) said exports could pose a challenge to the growth of the industry due to additional taxes.
India’s key exports to the United States include drug formulas and biologists ($8.1 billion), telecommunications instruments ($6.5 billion), precious and semi-pure stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewelry ($3.2 billion), including cotton and $280 million (including $280 million in cotton) (and $280 million), and $280 million in products.
“Net networks seem to have a much smaller impact on the U.S. market’s export competitiveness on a relative basis,” said Assocham President Sanjay Nayar. “However, our industry should work to improve export efficiency and value-added to mitigate the impact of these tariffs.”
