US Reciprocal Tariffs: Implications for India as Deadline Approaches
U.S. President Donald Trump plans to implement reciprocal tariffs on multiple countries beginning on April 2, aiming to rebalance international trade and bolster domestic policies. The U.S. and India are set to start discussions on a bilateral trade agreement, with India’s industries seeking protection from the anticipated tariffs. The outcome of these negotiations will be crucial for both nations’ trade relations.
As the April 2 deadline approaches, President Donald Trump plans to implement reciprocal tariffs affecting a wide range of countries, contrary to prior indications that only a select few nations would be involved. “You’d start with all countries, so let’s see what happens,” Trump stated, indicating that those tariffs are part of a broader strategy to enhance U.S. manufacturing and trade balance. The government may use revenue from these tariffs to support domestic policies and tax initiatives.
White House economic adviser Kevin Hassett confirmed that the tariffs would particularly target 10 to 15 countries with significant trade deficits. However, details regarding specific tariffs, their calculation, and potential exemptions remain unclear. Trump emphasized that these measures would consider other nations’ non-tariff barriers but has not specified how these would be assessed.
The anticipated tariffs have prompted discussions about their potential negative impact on global trade. UK Secretary of State Yvette Cooper remarked that increasing trade barriers could harm the world economy as a whole. Trump views the tariffs as tools for protecting U.S. economic interests and improving negotiation stances.
Amidst these looming tariffs, India and the United States are scheduled to initiate sectoral talks under a proposed bilateral trade agreement. Following a series of negotiations, both countries aim to enhance cooperation, reduce trade barriers, and achieve a significant boost in bilateral trade. The goal is to double trade to USD 500 billion by 2030 while finalizing preliminary agreements by fall 2025.
The U.S. has requested concessions in various sectors while India may seek tariff reductions in labor-intensive areas like textiles. Trump praised Prime Minister Modi as a strong ally, expressing optimism for successful tariff negotiations. However, Indian exporters have requested protections from the prospective tariffs, emphasizing their significant trade relationship with the U.S.
The U.S. is primarily interested in accessing India’s agricultural market, though experts believe India may resist negotiating sensitive sectors like dairy. In 2024, U.S. agricultural exports to India were valued at USD 1.6 billion, while India’s exports to the U.S. reached USD 119.71 billion, showing a substantial trade surplus. Furthermore, the U.S. has been a leading source of foreign direct investment in India over the past two decades, highlighting the robust economic ties between the two nations.
In conclusion, as the deadline for reciprocal tariffs approaches, significant uncertainty surrounds the potential impact on U.S.-India relations. While the U.S. seeks to instate tariffs for trade balance, India is negotiating to protect its industries and maintain favorable trade agreements. The evolving discussions signal an ongoing commitment to enhancing bilateral trade, despite the challenges posed by tariff impositions.
Original Source: www.livemint.com
