India to face reciprocal tariffs on April 2: Donald Trump

This comes after commerce and industry ministry officials earlier this week stated that India plans to engage with stakeholders and resolve all outstanding issues with the US in the bilateral trade agreement (BTA) both countries aim to sign by the end of the year.

Sectors such as steel and aluminum are already feeling the impact of the 25 per cent tariffs imposed by the US on these metals and industry representatives have said that exporters worth $5 billion are already facing the impact of the new tariffs. Moreover, the anti-dumping watchdog under the Commerce and Industry Ministry has proposed a 12 per cent duty on certain imported steel products that could drive up prices in the country.

According to SBI research, the US tariff rate on Indian goods increased from 2.72 per cent in 2018 to 3.91 per cent in 2021, before slightly declining to 3.83 per cent in 2022. Meanwhile, India’s tariffs on US imports have risen from 11.59 per cent in 2018 to 15.30 per cent in 2022.

However, during a meeting between Trump and Prime Minister Narendra Modi last month, India indicated its willingness to reduce tariffs bilaterally on a range of products. New Delhi has already lowered tariffs on bourbon whiskey and motorbikes, in which the US has significant export interests.

A Goldman Sachs report suggested that India could be affected by Trump’s tariffs at the national level, the product level, or through non-tariff barriers, all of which could complicate trade relations between the two nations.

At the national level, the report noted that reciprocity would be the simplest approach. If applied at the product level—where the US matches India’s tariffs on each imported product—“this may increase the average tariff differential by approximately 11.5 percentage points but would be more complex and require a longer implementation timeline.”

“Reciprocity through non-tariff barriers, such as administrative restrictions, import licences, and export subsidies, is the most complicated approach, given the challenges of estimating non-tariff barriers. However, it could lead to even higher tariffs at either the product or national level,” Goldman Sachs stated.