Donald Trump announces reciprocal tariffs from April 2, dashes India’s hopes for concessions | Business News
US President Donald Trump on Tuesday once again targetted India for its high tariffs, signalling that negotiations for a trade deal may not yield concessions for New Delhi on sweeping levies such as reciprocal tariffs, which are set to take effect from April 2. He singled out the auto sector, where he said India charges tariffs of over a 100 per cent.
“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 while addressing a Joint Session of the US Congress.
This comes just weeks after Prime Minister Narendra Modi’s visit to the US raised hopes among Indian industry that a trade deal with America could help New Delhi secure relief from sweeping tariffs in exchange for market access for US products in India. India had proactively slashed tariffs on a number of items such as bourbon whiskey even before negotiations began.
To be sure, efforts to soften the impact of reciprocal tariffs are ongoing, as Commerce Minister Piyush Goyal began his US trip on Monday to meet the new United States Trade Representative (USTR), Jamieson Greer, who has been tasked with implementing Trump’s tariff plan. Greer was also part of Trump’s first administration that broadly targeted China, which helped create export opportunities for India especially in the electronic sector.
Addressing Congress, Trump also said that other countries had imposed tariffs on the US for many years, and now it was time for the US to use tariffs against those countries. He stated that countries like the European Union, China, Brazil, and India impose much higher tariffs on the US than vice versa, calling the situation “unfair”.
President Donald Trump addresses a joint session of Congress at the Capitol in Washington. (Photo: AP)
Impact of reciprocal tariffs on India
Rating agency Moody’s stated last month that developing countries such as India, Vietnam and Thailand have among the widest rate differentials relative to the US and could see the greatest impact from US reciprocal tariffs.
“India has a lower overall exposure relative to most others in the region, although certain sectors such as food and textiles, as well as pharmaceutical products, face risks. Most companies in our rated portfolio are domestically focused, with limited exposure to the US market,” Moody’s report said.
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The rating agency pointed out that the currencies of targeted Asia-Pacific economies could face continued downward pressure due to potentially higher capital outflows and a likely stronger US dollar, with regional central banks having a much narrower window for easing domestic monetary policies to support economic growth.
“That said, most of these economies have adequate macroprudential buffers and sound monetary policy frameworks in place that will mitigate the impact of external shocks. Moreover, domestic demand in most parts of the region remains strong, bolstered by a modest easing of global and regional financial conditions,” the agency added.
US 2025 trade policy questions WTO itself
US tariffs, which disregard several World Trade Organization (WTO) principles and expose India to future uncertainty, coincide with the new US 2025 trade policy, which asserts that the WTO has “lost its way” and requires reform. The new trade document also criticises the concessions and carve-outs sought by developing countries such as India under the WTO’s special and differential treatment (SDT) provisions.
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“SDT status provides several benefits, including generous transition periods, higher tariff bindings, and the ability to use prohibited subsidies. Under the current system, countries can obtain SDT benefits by merely self-declaring as ‘developing’—regardless of their per capita gross national income or their income classification according to the World Bank,” the US 2025 trade policy, released on 3 March, stated.
‘WTO did not address China’s economic system’
The new US trade policy document argues that, at the time of its establishment, the WTO’s purpose and direction were clear, with parties expressing their determination to participate “in the world trading system, based on open, market-oriented policies”. However, 30 years later, the “viability and durability” of the WTO are increasingly in question.
“When China abandoned the market-oriented reform path on which its 2001 accession was premised and embraced state-led, non-market economic practices, the WTO was neither able nor willing to address China’s economic system, which is fundamentally incompatible with the open, market-oriented direction envisioned by WTO members and is contrary to the original principles of the WTO and its agreements,” the US trade policy stated.
