The anticipated U.S. tariff changes may significantly impact India’s exports, particularly in agriculture, as the U.S. is a crucial market for Indian goods. With projections of potential revenue loss between $2 billion to $7 billion, India aims to mitigate these effects through negotiations and tariff reductions while facing critiques regarding its own high tariffs from former President Trump.

The recent tariff threats by the United States could considerably affect India’s exports, as the U.S. constitutes a vital market for Indian products. Deepali Agrawal, Deputy Managing Director of EXIM Bank, commented that the true extent of this impact remains uncertain and will depend on the specifics of the United States’ tariffs. She emphasized the necessity for patience as the situation develops before a complete assessment can occur.

India’s exports to the United States were projected at approximately $74 billion for 2024, with major contributions from sectors such as jewelry, pharmaceuticals, and petrochemicals. In contrast, India’s weighted average import tariff stands at about 11 percent, which is significantly higher than U.S. tariffs on Indian goods by approximately 8.2 percentage points in 2023.

Furthermore, U.S. manufacturing exports to India may confront elevated tariffs, particularly affecting products like footwear, machinery, and food. The White House has noted that India’s agricultural tariffs are notably steep, averaging 39 percent, compared to a mere 5 percent on similar U.S.-origin items. Reciprocal tariffs by the United States could primarily impact India’s agricultural sector, which is already facing significant tariff disparities.

Research by India Ratings and Research predicted that if reciprocal tariffs were enacted, India’s exports to the U.S. could diminish by $2 billion to $7 billion in fiscal year 2026. Between April and December 2024, Indian exports to the U.S. increased by 5.57 percent, totaling $59.93 billion, alongside a modest 1.91 percent rise in imports from the U.S., reaching $33.4 billion.

Former President Donald Trump has expressed discontent regarding India’s tariffs, labeling them “very unfair.” He indicated that under his administration, the U.S. would impose substantial tariffs, asserting that many nations charge the U.S. significantly higher tariffs in return for trade. He stated, “This system is not fair to the United States and never was,” reflecting on the need for reciprocal tariff implementations starting April 2nd.

In response, India is seeking strategies to mitigate the potential fallout of these tariff threats, aiming for a trade agreement with the U.S. by fall 2025, as discussed during Prime Minister Modi’s recent Washington visit. Notably, India is making concerted efforts to alleviate tensions through reducing tariffs on select products and bolstering energy and defense imports from the U.S.

In summary, India’s exports to the United States are under potential threat due to impending tariff changes, with significant financial ramifications expected. While India’s trade negotiations continue, the impact of U.S. tariffs, particularly on agricultural products, could be far-reaching. The ongoing situation necessitates careful monitoring as both countries navigate trade relations amidst these challenges.

Original Source: m.economictimes.com

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