How Donald Trump's 26% Tariff Will Affect Indian Exports
Trump imposed a 26% tariff on Indian imports, citing tariff disparities. US President Trump said, “India, very, very tough. Very, very tough. You’re a friend of mine, but you’re not treating us right."
As US President Donald Trump announced the reciprocal tariff, India was slapped with a flat 26% on imports entering the United States.
Aside from country-specific tariffs, there is a “baseline tariff of 10% on imports from all countries in response to what he called an economic emergency.
The White House highlighted disparities in tariff rates, stating that the US imposes a 2.5% tariff on passenger vehicle imports, whereas India levies a 70% duty. Similarly, while apples enter the US duty-free, India imposes a 50% tariff on American apples. For rice, the US applies a 2.7% duty, whereas India enforces an 80% tariff on US rice imports.
Indian Reciprocal Tariff
While speaking about India, US President Donald Trump said, “India, very, very tough. Very, very tough. The Prime Minister just left. He’s a great friend of mine, but I said, ‘You’re a friend of mine, but you’re not treating us right. They charge us 52%. You have to understand, we charge them almost nothing for years and years and decades, and it was only seven years ago, when I came in, that we started with China.’”
The White House statement also noted that while the United States imposes a 0% tariff on networking switches and routers, India applies tariffs ranging from 10% to 20%. Additionally, the US has a trade deficit of $46 billion with India.
According to Reuters, about $14 billion worth of electronics and over $9 billion of gems and jewellery exports from India will be significantly affected by the US tariffs. The newly imposed 26% tariff will not cover auto parts and aluminium products, they will still be subject to the 25% tariff announced earlier.
However, pharmaceutical products—amounting to nearly $9 billion in exports from India—and energy products have been exempted from the latest round of tariffs, the report cited the White House note.
Washington’s previous sector-wide average tariffs on Indian exports were relatively low: 1.05% for automobiles, 2.12% for gems and jewellery, 1.06% for chemicals and pharmaceuticals, and 0.41% for electronic products, as per the report.
The White House statement criticised India for imposing uniquely burdensome and duplicative testing and certification requirements in sectors like chemicals, telecom products, and medical devices, making it challenging and costly for American companies to access the Indian market.
A New Opportunity?
In February, Prime Minister Narendra Modi visited the US, and the two nations agreed to start talks towards an early trade deal and resolving their stand of tariffs. India is open to cutting tariffs substantially for over $23 billion worth of US goods being sold to India.
With Trump imposing higher tariffs on China, India has an opportunity to expand its market share in US exports, particularly in sectors such as textiles, apparel, and footwear, according to an internal Indian government, as per Reuters.
India can raise exports of iron and steel products too, where it has manufacturing competence, "especially if tariffs on China are higher," the report stated.
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