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As Trump’s April 2 tariff deadline nears, uncertainty looms. An Emkay report estimates India could lose $6 billion in exports at 10% tariffs, rising to $31 billion at 25%.
US President Donald Trump and Prime Minister Narendra Modi shake hands as they attend a joint press conference at the White House in Washington, DC, US. (FILE IMAGE: REUTERS)
Trump Tariff Deadline: As US President Donald Trump’s April 2 deadline for reciprocal tariffs nears, stakeholders remain uncertain about their implementation as Washington moves toward negotiating a new trade agreement with India.
A recent Emkay report estimates that India could lose approximately $6 billion (0.16% of its GDP) in exports to the US if tariffs are set at 10%. If the tariff rate increases to 25%, the impact could rise dramatically to $31 billion.
The report suggests that while the exact nature of reciprocal tariff implementation is unclear, a broad country-level tariff by the US seems the most probable scenario. This is due to the complexities surrounding sector- or commodity-specific tariffs. India could be severely affected by these broad reciprocal tariffs.
US-India Trade Relations
From 2021-22 to 2023-24, the US was India’s largest trading partner, accounting for about 18% of India’s total goods exports, 6.22% of imports, and 10.73% of bilateral trade. India exports to the US across 30 sectors, including six in agriculture and 24 in industry.
Sector-Level Impact
If sector-level tariffs are implemented, the following products will be impacted (Estimated):
- Alcohol, Wines, and Spirits: Tariff hike of 122.10%, affecting $19.20 million in exports.
- Dairy Products: 38.23% tariff increase on $181.49 million in trade, impacting products like ghee, butter, and milk powder.
- Fish, Meat, and Processed Seafood: 27.83% tariff increase on $2.58 billion in exports, affecting shrimp competitiveness.
- Live Animals and Animal Products: 27.75% tariff increase on $10.31 million in exports.
- Processed Food, Sugar, and Cocoa: 24.99% tariff increase on $1.03 billion in exports, impacting snacks and confectionery.
- Footwear: 15.56% tariff differential.
- Diamonds, Gold, and Silver: 13.32% tariff increase on $11.88 billion in exports, affecting jewelry prices.
- Industrial Goods: 10.90% tariff increase on pharmaceuticals.
- Edible Oils: 10.67% tariff increase on coconut and mustard oil.
Ores, minerals, petroleum, and garments will not face new tariffs.
India’s Counter-Offer
To mitigate the impact of US tariffs, India has offered tariff reductions on various US imports, particularly agricultural products. In recent negotiations, India proposed reducing tariffs on items like almonds, cranberries, and bourbon whiskey—key US exports identified in broader trade talks.
Reuters reported that India is willing to offer tariff cuts on over half of US imports worth $23 billion, marking a significant concession. The Central government’s analysis indicates that 87% of India’s $66 billion exports to the US could be affected by reciprocal tariffs. To prevent these disruptions, India’s offer is substantial, potentially lowering or eliminating tariffs.
