In the first round, the new Trump administration imposed tariffs on China, Mexico and Canada. Trump also said he would collect 25% tariffs on metal imports.
The threat of action against India is looming heavily as Trump often calls India the “custom king.” With a proactive move to help reduce risk, India’s February 1 budget cuts duties for aquatic feed, certain waste and waste production, satellite ground installation, Ethernet switches and motorcycle facilities and directly benefit American exports.
The United States is India’s largest trading partner. In 2014, exports to the US to India were $775.1 billion and imports were $42.2 billion. Trump is targeting countries with the US in a trade deficit and seeking more exports.
Pressure to lower tariffs
Trump’s grouse in India is a tariff abuser, with New Delhi imposing a standard 42-120% obligation on almonds, 30% importing tariffs on cherries and cranberries, and 50% imposing apples It arises from the fact that there is. The US was also concerned about a mandatory duty of more than 70% of chickpeas and 35% of diagnostic reagents.
“The US is bound by the Uruguay Round’s WTO commitment. As such, developed countries have a low right to impose high tariffs, India will not gain market access through this system of mutual tariffs, but is based in Delhi The trade expert said:
India’s weighted average tariffs are 9.2% for minerals, 26.1% for footwear and 24.8% for textiles and clothing, which is higher than Indonesia, Malaysia and the Philippines. The US is likely to pressure India to lower tariffs on these items.
Where can India benefit?
India could benefit from the US-China trade war. India was the fourth largest beneficiary when the US placed high obligations on Chinese products during Trump’s first tenure.
After returning to power, Trump signed an order to impose strict tariffs on imports from China. China retaliated by slapping US coal and LNG exports and 15% tariffs on 10% oil and agricultural equipment, and announced a survey to Google, rekindling the trade war.
“This has a positive impact on us. Exporters are giving positive feedback about export orders and values,” the official said.
Exporters have told the government they hope to unlock the US $25 billion export potential.
“The rise in Chinese tariffs can create a great opportunity for India’s exports, particularly in the sector where Beijing was previously the dominant supplier,” said President Ashwani Kumar of the Indian Export Agency (FIEO). It states.
According to FIEO, India has announced that China will be in sectors such as electronics and electrical equipment (an extra $10 billion export potential), textiles and clothing, toys, chemicals, auto parts, footwear, furniture, home decoration, and more. It can be replaced.
However, the catch here is customs duties. The simple average tariff in India is 17%, but the actual obligations for major US imports are much lower. The weighted average tariff on US exports to India is less than 5%.
“As the US remains the top market for Indian engineering products, we are being cautious about the possibility of hiking tariffs by the Trump government,” said Pankaj Chada, chairman of the Council for Promotion of Engineering Exports in India.
Non-Tax Barrier
Washington imposes strict emissions and safety regulations that Indian automotive products must comply with, leading to increased compliance costs. Additionally, the USMCA (US-Mexico-Canada Agreement) will reduce tariffs on imports from Mexico and Canada, causing Indian vehicles to be less competitive in pricing.
India can seek regulatory restrictions that limit access to the US market, tariff barriers, and relaxation of safety and environmental compliance requirements.
Evolving bonds
During Trump 1.0 (2017-2021), the US imposes high tariffs on steel (25%) and aluminum (10%), withdrawing profits from India’s Generalised System (GSP), digital trade, agricultural market access pricing caused concerns about medical devices. Bilateral trade agreements are being made due to the US seeking greater access to India’s agriculture and e-commerce sector and conflicting priorities with the US demanding tariff reductions and GSP benefits recovery. Efforts to negotiate have stagnated.
“The Trump 2.0 administration may see a reciprocal partnership return that emphasizes bilateral trade negotiations, tariff hikes and reduced dependence on China. India will see US agricultural products, medical devices and dairy products. The company is likely to face new pressures to reduce tariffs on the market. A Delhi-based trade watcher said:
Digital trade regulations can be a serious issue as India’s data localization policy may conflict with US business interests.
However, both are part of the Indo-Pacific economy framework, US chips law, and have signed investment incentive agreements.
What should India do?
India needs to diversify IT exports to reduce import tariffs, strengthen data policies, reject the IPEF trade pillars, promote in India, as well as reduce the risks arising from potential tariffs There is.
“The strategic partnership between India and the US companies can facilitate entry into the market, increasing competitiveness by diversifying into high demand segments such as EV components, semiconductors, and specialized chemicals. Reduce export dependence,” says research and advisory firm VEK.
New Delhi: Prior to Prime Minister Narendra Modi’s visit to the US, India has reduced tariffs on various products as Washington strengthens the threat of mutual tariffs.
In the first round, the new Trump administration imposed tariffs on China, Mexico and Canada. Trump also said he would collect 25% tariffs on metal imports.
The threat of action against India is looming heavily as Trump often calls India the “custom king.” With a proactive move to help reduce risk, India’s February 1 budget cuts duties for aquatic feed, certain waste and waste production, satellite ground installation, Ethernet switches and motorcycle facilities and directly benefit American exports.
The United States is India’s largest trading partner. In 2014, exports to the US to India were $775.1 billion and imports were $42.2 billion. Trump is targeting countries with the US in a trade deficit and seeking more exports.
