India’s exports to US hit with 27% tariff, Asian rivals face higher tariffs; US markets in turmoil

On Wednesday, Trump claimed his tariffs will “reverse the economic damage left by the previous administration” and put America on a path to a “new golden age”. As a first step in resetting the trade order, he imposed a blanket 10 per cent tariff on all countries. He followed this up with individual reciprocal tariff rates on nations with which the US has a high trade deficit, pulling global stock indices down and increasing the odds of a US recession that could eventually slow global trade growth.

Trump slapped tariffs of 10-20 per cent on Western partners such as the UK and the European Union, but his focus remained firmly on China and countries receiving significant Chinese investment—touted as China-plus-one nations—acting as conduits for Chinese products into the Western world. While US tariffs on India were set at 27 per cent despite ongoing trade negotiations, China was hit with 34 per cent tariffs, pushing the effective US tariff rate on Chinese goods to a record 54 per cent after factoring in earlier tariffs.

In what could potentially benefit India, most of its Asian peers, which are home to the global manufacturing supply chain, are set to face higher tariff rates, including 36 per cent on Thailand, 32 per cent on Indonesia, and 48 per cent on Laos. However, the tariffs imposed on India were higher than the 24 per cent duty on Japan and 25 per cent on South Korea, both of which operate higher up in the manufacturing supply chain. Tariffs on the EU stood at 20 per cent, while the UK faced a 10 per cent tariff. Notably, Trump announced a 32 per cent tariff on Taiwan, a key chip manufacturing centre.

‘Indian PM is a friend, but…’

India imposes their own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that US exports would increase by at least $5.3 billion annually,” a White House statement said Thursday.

Tariffs on India came even as the Indian industry had expected relief due to ongoing India-US trade negotiations, where India had indicated substantial tariff cuts.

LIBERATION DAY RECIPROCAL TARIFFS 🇺🇸 pic.twitter.com/ODckbUWKvO

— The White House (@WhiteHouse) April 2, 2025

Trump said Indian Prime Minister Narendra Modi is a friend but claimed India was charging 52 per cent on US goods. “The Indian 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, and we have charged them almost nothing for years and years,” Trump said while announcing the reciprocal tariffs on India during a White House press briefing.

Former trade officer and head of the think tank GTRI, Ajay Srivastava, stated the imposition of higher reciprocal tariffs by the United States on several Asian countries—including China, Vietnam, Taiwan, Thailand, and Bangladesh—presents an opportunity for India to strengthen its position in global trade and manufacturing.

“With the US setting a relatively lower reciprocal tariff rate of 27 per cent on Indian goods—compared to 54 per cent on China, 46 per cent on Vietnam, 37 per cent on Bangladesh, and 36 per cent on Thailand—India gains a natural competitive advantage in several key sectors,” Srivastava said.

“One of the most significant areas of opportunity lies in textiles and garments. The high tariffs on Chinese and Bangladeshi exports create space for Indian textile manufacturers to gain market share, attract relocated production, and increase exports to the US India’s strong foundation in textile production, combined with lower tariffs, could drive greater global demand and new investments in the sector,” he said.

Trump argued that the US is only imposing half the tariffs that other countries charge. “I call this kind reciprocal. This is not fully reciprocal. But what we do is we cut it in half. We charge them. The answer is very simple—if they complain, if you want your tariff rate to be zero, then you build your product right here in America, because there is no tariff,” Trump said.

A White House fact sheet stated that the US will impose a 10 per cent tariff on all countries from April 5, and an individualised reciprocal higher tariff on countries with which the United States has the largest trade deficits from April 9.

“President Trump will impose an individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits. All other countries will continue to be subject to the original 10% tariff baseline. These tariffs will remain in effect until such time as President Trump determines that the threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated,” the White House statement on reciprocal tariffs said.

Move against foreign trade barriers

Referring to the US Trade Representative (USTR) report on foreign trade barriers, Trump claimed that for decades, the US had reduced trade barriers for other countries, while those nations imposed massive restrictions on American products.

“For decades, the United States has been slashing our trade barriers for other countries, while those nations placed massive tariffs on our products and created outrageous non-monetary barriers to decimate our industries. And in many cases, the non-monetary barriers were worse than the monetary ones,” Trump said.

In an apparent reference to China, Trump accused certain countries of manipulating their currencies, subsidising exports, stealing intellectual property, and adopting unfair rules and technical standards while creating “filthy pollution havens.”

USTR report on India

The USTR report on trade barriers criticised India’s high applied tariffs on a wide range of goods, including vegetable oils, apples, maize, motorcycles, automobiles, flowers, natural rubber, coffee, raisins, walnuts, and alcoholic beverages. It noted that the gap between India’s WTO-bound and applied tariff rates allows the government to adjust tariffs unpredictably, creating uncertainty for US stakeholders.

“The Indian government has leveraged this flexibility, increasing tariffs on approximately 70 product categories in the 2019/2020 budget and on 31 categories in 2020/2021, including key US exports,” the report said.

The report also flagged India’s regulations on the import of milk, pork, and fish products, stating that they require genetically modified (GM)-free certificates “without providing a scientific or risk-based justification.” It reiterated a long-standing American concern over India’s agricultural support programmes, which, according to the US, distort markets. However, Indian officials have argued that US subsidies for farmers are much higher than those provided by India.