Does India need to panic due to Trump tariffs? Official says not yet

It would be premature to panic on Trump’s reciprocal tariffs, top government sources told Times Now on Thursday. The statement comes after US President Donald Trump yesterday doubled down on the tariff war that he's unleashed, pledging to impose similar levies on India and others from April 2. These reciprocal tariffs are in response to, according to him, high import taxes on American goods.

Trump delivered his latest tariff threat while addressing a joint session of the US Congress, citing India alongside the European Union, China and Canada as those charging higher levies.

The April 2 deadline leaves India with less than four weeks to work on its plan of action. Commerce and industry minister Piyush Goyal is visiting Washington to resolve tricky trade issues and kickstart talks on a proposed Bilateral Trade Agreement.


The US President's tough talk comes just about a month after Prime Minister Narendra Modi met him. In February, both sides agreed to negotiate a trade deal by the end of the year. They also set a target of $500 billion in annual trade by 2030 during Modi's trip to the US.

Stakeholder Consultations Begin

Trump said in his address that other countries have used tariffs against the US for decades and now, it is "our turn."

"On average, the European Union, China, Brazil, India, Mexico and Canada - have you heard of them? - and countless other nations charge us tremendously higher tariffs than we charge them," Trump said. "It's very unfair. India charges us auto tariffs higher than 100%. China's average tariff on our products is twice what we charge them. South Korea's average tariff is four times higher."

Exchange Mechanism

India is waiting to see what the US does, but officials are hopeful of making some headway in view of the proposed trade deal. Still, experts fear New Delhi's key export sectors may face some heat.

The commerce and industry ministry has already initiated stakeholder consultations to assess the impact of a hike in US tariffs and India reducing levies in sectors in which New Delhi has aggressive interests. Separately, an inter-ministerial committee is also studying the possible impact of such measures.

"We expect many issues to be resolved in the next few days so the impact of the reciprocal tariffs is minimised," said an official.

Trade experts said the government may propose eliminating tariffs on most industrial products from the US, provided that country does the same for Indian goods. India can offer tariff lines where it already allows duty-free imports under existing free trade agreements (FTAs). Agriculture can be excluded from the offer. "India should present this proposal before April, ahead of any US tariff decisions. If other countries object, India can later notify the deal to the WTO as a goods-only trade agreement," said Ajay Srivastava of think tank Global Trade Research Initiative (GTRI).

Some key US products such as motorcycles, apples, cranberries, almonds, chickpeas and diagnostic reagents face double-digit import levies in India even though New Delhi reduced customs duties on motorcycles in the February 1 budget. A 30% duty is imposed on motorcycles, a standard 42-12O% on almonds, 50% on apples and 35% on diagnostic reagents.

While India's weighted average tariff on American goods is 7.7%, compared with 2.8% on Indian exports to the US, some sectors face a significantly higher gap. India's weighted average tariff is 9.2% on minerals, 26.1% on footwear and 24.8% on textiles and clothing, higher than Indonesia, Malaysia and the Philippines.

The US is likely to pressure India to lower tariffs on these items, said one trade body official.

The US is India's largest trading partner. In FY24, India's exports to the US amounted to $77.51 billion, while imports were $42.2 billion.

The impact of higher levies will depend on the existing tariff gap, another expert said. "However, the real concern is that the US may not limit itself to just tariff differentials," Srivastava of GTRI said. "Trump's approach could factor in non-tariff barriers and local taxes like GST, pushing the retaliatory tariffs even higher." This could disrupt India's exports to the US, making goods less competitive and affecting sectors that rely heavily on that market, he said.

Engineering Export Promotion Council chairman Pankaj Chadha said continuous government support in export credit and technology would be critical to maintaining competitiveness.