Trump Tariffs on India: 26% Import Duty Hits Hard
In a major turn of events that has ramifications for US-India trade relationships, former US president Donald Trump imposed a 26% tariff on imports from India, making it one of the highest tariffs on any major US trading partner. Trump also noted he had a good relationship with Prime Minister Narendra Modi, but asserted that he would not let those political alliances affect his decisions on trade policy.
India Have Higher Tariffs than EU, Japan and South Korea The tariff on India is greater than the EU tariff at 20%, Japan at 24%, and South Korea at 25%. Meanwhile, China has the largest tariffs with a minimum of at least 54% on select goods. At a White House press conference on April 2, Trump stated, “We need fair trade; India is very very tough. The prime minster just left – a really great friend of mine – and I told him, you know, you are my friend – but you are not treating us right. ‘They charge us 52%’.”
Implications for India’s Trade Policies
The latest news on business in the world economy indicates that these tariffs will lead India to look for a trade agreement with the United States. In a prior effort to ease tensions, the Modi administration had lowered tariffs on over 8,500 industrial products, including American whiskey and Harley-Davidson motorcycles, and had reportedly expressed a desire to purchase more oil, LNG and defense supplies from the United States to address the trade deficit. These tariffs add considerable pressure on New Delhi to make additional tariff reductions, and roll back a number of non-tariff trade barriers, such as import bans and licensing requirements.
US-India Trade Relations to continue
Nonetheless, both governments are committed to improving the US-India trade relationship. India and United States once agreed to take bilateral trade from $127 billion in 2023 to $500 billion by 2030. Agriculture negotiations are usually delicate, and India has resisted the pressure to convene on US agricultural user tariffs. As this dynamic unfolds, India’s action and inaction will be able to inform the next stage of US-India trade relations.
