President Donald Trump of the United States of America has imposed a 25 percent tariff rate on India before his August 1 deadline, which he had set concerning reciprocal tariffs. India and the US are negotiating a trade agreement, but an interim agreement is yet to be concluded. This has made India the newest member in the list of nations facing an increase in tariffs on trade under the Trump administration as a result of his so-called Liberation Day trade plan aimed at rearranging Free trade alliances of America based on improved bilateral deals.
India is likely to be hit with the revised US tariffs affecting the export of its goods to America, which is estimated to touch nearly $87 billion in the year 2024. This encompasses such labour-intensive industries as clothing, medicines, gems and jewelry, and petrochemical products. The United States has an outstanding trade imbalance with India, amounting to 45.7 billion in its favour.
President Trump took his own social media platform Truth Social and announced, “Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country.”
“Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!” he mentioned furthermore.
While addressing the statement, the Ministry of Commerce and Industry mentioned, “The Government has taken note of a statement by the US President on bilateral trade. The Government is studying its implications.”
In addition to this, the statement further read, “India and the US have been engaged in negotiations on concluding a fair, balanced, and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective. The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs. The Government will take all steps necessary to secure our national interest, as has been the case with other trade agreements, including the latest Comprehensive Economic and Trade Agreement with the UK.”
With the trade deal discussions seemingly having reached a deadlock on the possibility of taking the next step by the end of August, it turns out that India was already anticipating 20-25 per cent tariffs to be introduced by the Trump administration.
Negotiations are going on positively, one government official had told Reuters, with Trump supposedly having the power to impose a tariff order in a worst-case scenario.
“We would think it would be a temporary change, but reflecting on the five rounds of trade talks that have occurred. An agreement will be reached soon,” the official had said.
When the US officials hold a sixth round of talks in India in the last week of August, there is hope that the trade deal may be reached within the next few months.
