Trump Signals No Reprieve from Tariffs for India, Complicating Trade Relations

President Trump declared that no reprieve from reciprocal tariffs will be granted to India, effective April 2. This decision aims to align US tariffs with those of other nations, raising concerns over its impact on trade talks with India. Analysts predict significant losses for Indian exporters and emphasize the need for a swift trade agreement to counter these challenges.

In his recent address to Congress, United States President Donald Trump announced that India will not receive relief from the reciprocal tariffs set to take effect on April 2. The purpose of these tariffs is to align the United States’ tariffs and barriers with those imposed by other nations. Trump emphasized that countries such as the European Union, China, Brazil, Mexico, and Canada impose higher tariffs on American goods, labeling this situation as unfair, particularly highlighting India’s auto tariffs exceeding 100 percent.

This announcement complicates the trade relationship between India and the United States, especially as Prime Minister Narendra Modi and President Trump had previously expressed intentions to finalize a beneficial trade agreement within the next several months. Simultaneously, Indian Trade Minister Piyush Goyal is in Washington to discuss key details with the Trump administration officials, seeking clarification regarding shifts in trade policies before the tariffs take effect.

Ajay Sahai, CEO and Director-General of the Federation of Indian Export Organisations, commented, “Probably this could be a signal to conclude the trade agreement between India and the US quickly.” He articulated that the goal of enhancing bilateral trade to $500 billion would be unachievable under the threat of high tariffs, questioning the viability of a preferential trade arrangement under these circumstances.

Analysts from Citi Research indicate potential losses for Indian exporters could reach $7 billion annually due to these reciprocal tariffs, with sectors such as metals, chemicals, and jewelry facing the highest risk, while pharmaceuticals, automobiles, and food items are also significantly affected.

Moreover, President Trump addressed non-monetary tariffs, asserting that if India imposes such barriers, the United States would reciprocate. He stated, “If they do non-monetary tariffs to keep us out of their market, then we will do non-monetary barriers to keep them out of our market.” According to Nomura’s data, the US encounters a significant number of non-tariff measures from India, comprising various trade restrictions including anti-dumping duties.

President Trump’s announcement on reciprocal tariffs against India underscores the complexities in US-India trade relations. The potential repercussions for Indian exporters could be severe, leading to estimations of substantial financial losses. As both countries navigate their trade objectives, reaching a conclusive trade agreement appears essential to mitigate the impacts of these tariffs and enhance bilateral economic cooperation.

Original Source: www.business-standard.com