Nation better placed than competitors, say experts
Washington/New Delhi: President Donald Trump slapped universal duties on all countries exporting goods to the US and additional steep levies on countries like India, potentially impacting sales of products from shrimp to steel in the world’s biggest economy.
The US imposed a steep 27% tariff on all goods, barring pharmaceuticals, semiconductors, energy and certain minerals not available in the United States, that are imported from India, calling the country the “worst offenders” of unfair trade practices.
Export of products such as shrimp, carpet, medical devices and gold jewellery to the US will be impacted. On the other hand, exports of electronics, textiles and pharma will get an edge over its competitor
countries. Exemption of energy from the tariffs would also mean that India can continue to export fuels like gasoil and gasoline to the US.
The goods that were exempted from the tariffs made up for just over 25% of the total exports from India to the US.
Trump announced the imposition of additional ad valorem duties ranging from 10% to 50% on imports from all trading partners.
The baseline duty of 10% will be effective on India from April 5 and an additional 27% from April 9. The 27% duty would be over and above any existing levy that Indian products entering the US may currently attract.
Though the move is expected to impact India’s exports of certain goods to the US, experts say that India is better placed than its competitors, including Bangladesh (37%), China (54%), Vietnam (46%) and Thailand (36%) who face increased levies.
President Trump, in a historic measure to counter higher duties on American products imposed globally announced reciprocal tariffs on about 60 countries.
“This is Liberation Day, a long-awaited moment. April 2, 2025, will forever be remembered as the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to make America wealthy again. We are going to make it wealthy, good, and wealthy,” Trump said in his remarks from the Rose Garden at the White House on Wednesday.
He said that the tariffs imposed on India were half of what New Delhi charged the US – 52% after factoring in trade and non-trade barriers and currency adjustments. He said that the United States charges other countries only a 2.4 % tariff on motorcycles, but Thailand and others are charging much higher rates, like 60%, India 70%, Vietnam 75% and others charge even higher rates.
India’s goods trade surplus with the US was $46 billion in 2024 (1.2% of GDP). Key pharma exports have been exempted for now while automobiles and components have already been hit by a 25% tariffs just a few days back.
India’s software exports to the US, estimated at around $103 billion in FY24, too would have no tariff impact. Pharma exports at $12.7 billion form almost 14% of total exports to the US from India. Engineering goods and specialty chemicals could be worst impacted. Automobile exports from India to the US are just $2.8 billion, or roughly 3% of total exports.
For the Indian gems and jewellery sector, already struggling since the last few years due to changing customer preferences, lab-grown diamond technology, demonetisation, and soaring gold prices, the US tariff developments now create additional adverse impact, with an increased risk of job losses and margin erosion.
In textiles, India may have an advantage as its rivals Bangladesh, Vietnam, Cambodia, Pakistan, China and Sri Lanka have been slapped with higher tariffs. The US buys over $36 billion textiles from India, which is around 30% share of India’s exports.
Action likely to trigger trade wars
Washington: President Donald Trump on Wednesday announced far-reaching new tariffs on nearly all US trading partners – a 34% tax on imports from China and 20% on the European Union, among others – that threaten to dismantle much of the architecture of the global economy and trigger broader trade wars.
Trump, in a Rose Garden announcement, said he was placing elevated tariff rates on dozens of nations that run meaningful trade surpluses with the United States, while imposing a 10% baseline tax on imports from all countries in response to what he called an economic emergency.
The President, who said the tariffs were designed to boost domestic manufacturing, used aggressive rhetoric to describe a global trade system that the United States helped to build after World War II.
He said “our country has been looted, pillaged, raped and plundered” by other nations.
The action amounts to a historic tax hike that could push the global order to a breaking point. It kick-starts what could be a painful transition for many Americans as middle-class essentials such as housing, autos and clothing are expected to become more costly, while disrupting the alliances built to ensure peace and economic stability.
Trump said he was acting to bring in hundreds of billions in new revenue to the US government and restore fairness to global trade. “Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.”
Trump declared a national economic emergency to levy the tariffs. He has promised that factory jobs will return to the United States as a result of the taxes, but his policies risk a sudden economic slowdown as consumers and businesses could face sharp price hikes.
