Trump Exempts Pharmaceuticals from New Tariffs, Easing Trade Pressure on India
President Trump announced a 26% reciprocal tariff on India while exempting pharmaceuticals and certain minerals. This exemption may benefit India’s generic medicines sector amid concerns about trade imbalances and high tariffs imposed by India on U.S. goods, which the U.S. claims hinder American exports. The tariffs will take effect from April 9, with some global tariffs starting April 5.
On Thursday, US President Donald Trump alleviated concerns for India’s pharmaceuticals sector by excluding certain goods, including pharmaceuticals, from his newly imposed reciprocal tariffs. These exclusions also encompass energy, various minerals, steel, aluminum products, and automobile parts, as indicated in a White House fact sheet. This decision aims to provide a potential reprieve for India’s generic medicine industry amidst intensified trade tensions.
Trump announced a 26 percent reciprocal tariff specifically targeting Indian imports, justifying this action by citing India’s 52 percent tariff on US goods. India has now joined 17 other countries subjected to these substantial tariffs; among them, Vietnam faces a 46 percent tariff and the Philippines 17 percent. The new tariffs will be instituted on April 9, while a uniform 10 percent tariff will apply globally effective April 5.
The White House highlighted examples of India’s high tariffs and trade restrictions, notably its 70 percent tariff on passenger vehicle imports and up to 80 percent on rice. Additionally, the US pointed out the laborious nature of India’s testing and certification requirements in various sectors, asserting that these barriers significantly impede American exports and could potentially add $5.3 billion in annual revenue if eliminated.
Despite India’s average most-favored-nation tariff rate being assessed at 17 percent, the rationale for the 26 percent reciprocal tariff emanates from concerns regarding the trade imbalance. The US Trade Representative explained that calculations reflected tariffs necessary to rectify bilateral trade deficits, addressing various trade barriers that hinder American products from accessing the Indian market.
In summary, President Trump’s exemption for pharmaceuticals from reciprocal tariffs offers a significant benefit to India’s generic medicine industry, which faces substantial trade challenges. The imposition of a 26 percent tariff, alongside a broader strategy aimed at correcting trade imbalances, highlights the complexities of U.S.-India trade relations. Furthermore, easing testing requirements could foster enhanced trade opportunities for American goods in India.
Original Source: www.business-standard.com
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