President Donald Trump announced reciprocal tariffs on India starting April 2, signaling a tough path ahead in the Free Trade Agreement (FTA) negotiations, which could clash with these sweeping tariffs.
New Delhi, however, remains hopeful that the understanding reached between Prime Minister Narendra Modi and President Trump on February 13 will help resolve trade issues and keep the September deadline for signing the first tranche of the FTA. Commerce and Industry Minister Piyush Goyal has began his US trip on Monday to meet the new United States Trade Representative (USTR), Jamieson Greer.
In his first address of his second term to a joint session of Congress, President Trump defended his strict tariff policies, highlighting that the US has long faced high tariffs from several countries, including India. He announced that his administration would impose reciprocal tariffs on several countries starting April 2.
“On average, the European Union, China, Brazil, India, Mexico and Canada have you heard of them? And countless other nations charge us tremendously high tariffs than we charge them, It’s very unfair,” Trump said.
Trump had previously referred to India as a “tariff king” and highlighted the auto sector, saying that India imposes tariffs of over 100 percent. “India charges us 100 per cent tariffs; the system is not fair to the US, it never was. On April 2, reciprocal tariffs kick in. Whatever they tax us, we will tax them. If they use non-monetary tariffs to keep us out of their market, then we will use non-monetary barriers to keep them out of our market,” Trump said.
Soon after announcing the reciprocal tariff, the White House put out a factsheet talking about India’s high tariff: The U.S. average applied Most Favored Nation (MFN) tariff on agricultural goods is 5%. But, India’s average applied MFN tariff is 39%. India also charges a 100% tariff on US motorcycles, while we only charge a 2.4% tariff on Indian motorcycles.
New Delhi is hopeful that “trade issues can be sorted mutually” as India-US ties are “multifaceted” in line with the understanding arrived at the meeting between Prime Minister Modi and President Trump. “We have a roadmap that will ensure we sort out any issue through consultations,” said a source.
India has taken steps to enhance market access for US agricultural products like alfalfa hay, duck meat, and medical devices and lowered tariffs on US products, such as bourbon whiskey, motorcycles, ICT products, and metals. “The plan we have chalked out while setting a trade target of 500 billion USD by 20230 is mutually agreeable. It has many elements as agreed between the leadership of two countries including increasing US industrial exports to India and expanding Indian exports of labor-intensive products to the US,” said the source.
The US reciprocal tariffs also overlook several World Trade Organization agreements, such as preferential trade arrangements, put emerging economies like India to a tight spot. (Indian Express)
