President Donald Trump has announced reciprocal tariffs on India from April 2, setting a difficult path ahead for free trade agreement (FTA) talks that could clash with the tough tariffs.
However, the understanding reached between Prime Minister Narendra Modi and President Trump on February 13 to address trade issues and set a September deadline for signing the first tranche of the FTA will help New Delhi. Commerce and Industry Minister Piyush Goyal began his US visit on Monday by meeting the new US Trade Representative (USTR) Jamieson Grier.
In his first speech of his second term to a temporary session of Congress, President Trump defended his tough tariff policies, noting that the United States has long faced high tariffs from several countries, including India. He announced that his administration would start imposing reciprocal tariffs on several countries starting April 2.
“You know, Europe, China, Brazil, India, Mexico and Canada, you know? “They’re charging much higher tariffs than we’re charging, and it’s very unfair,” Trump said.
Trump has previously called India a “tariff king” and said that India would impose tariffs on more than 100 products, including autos. “India is showing us a 100% tariff; the system is not fair to the United States, it never was. On April 2, the reciprocal tariffs will go into effect. Whatever they tax us, we will tax them anyway. If they use non-monetary tariffs to keep us out of their market, we will use non-monetary barriers to keep them out of ours,”
Reciprocal Tariff Statement Shortly after, the White House issued a fact sheet about India’s high tariffs: The United States’ average most-favoured-nation (MFN) tariff on agricultural goods is 5%. But India’s average MFN tariff is 39%. India charges a 100% tariff on U.S. motorcycles, while we only charge a 2.4% tariff on Indian motorcycles.
New Delhi hopes that the India-US relationship is “multifaceted” and that “trade issues can be resolved mutually,” in line with the understanding reached during the meeting between Prime Minister Modi and President Trump. “We have a roadmap that ensures that any issue is resolved through dialogue,” a source said.
India has taken steps to improve market access for American agricultural products such as alfalfa hay, duck meat and other equipment, and has reduced tariffs on American products such as bourbon whiskey, motorcycles, ICT products and metals. “The plan we have made, setting a trade target of US$500 billion by 20230, is mutually beneficial. There are many elements that have been put in place by the two countries, including increasing US industrial exports to India and expanding Indian sales of labour-intensive products to the US. Source
The US also ignores some of the WTO agreements, such as reciprocal tariffs and preferential trade arrangements, putting emerging economies like India in a tough spot.
