- Friday, April 04, 2025
The Trump administration, however, exempted pharmaceutical exports from the tariff bringing cheer to India’s pharma industry
By: India Weekly
THE US slapped a 26 per cent tariff on imports from India in a setback to the South Asian nation’s expectation of getting relief from president Donald Trump’s global trade policy that has unnerved world markets for weeks.
While Trump said Indian goods will face a 26 per cent tariff, the White House executive order put the rate at 27 per cent.
India’s trade ministry too put the rate at 27 per cent, citing the executive order.
A baseline 10 per cent baseline tariff starts on Saturday (5) before the remaining, higher reciprocal tariff takes effect from April 9.
“They (India) are charging us 52 per cent and we charge almost nothing for years and years and decades,” Trump said at the White House while announcing the reciprocal tax.
Trump has slapped higher duties on other countries, including 34 per cent on China on top of a 20 per cent tax announced earlier, and 46 per cent on Vietnam.
India gains a natural competitive advantage in several key sectors due to the relatively lower tariffs imposed, research firm Global Trade Research Institute said in a note.
Nearly $14 billion worth of electronics products and over $9 billion worth of gems and jewellery are among the top sectors to be hit by the US tariffs.
The Trump administration, however, exempted pharmaceutical exports from the tariff bringing cheer to India’s pharma industry.
The US accounted for nearly a third of India’s pharmaceutical exports – mainly cheaper versions of popular drugs – with sales of about $9 billion last fiscal year.
India’s export competitiveness would be less impacted than key rivals due to its position in the middle of the tariff rates, said the country’s industry bodies, Assocham and the Federation of Indian Export Organisations.
The duty of 26 per cent was based on tariff and non-tariff barriers including currency manipulation, the Trump administration said.
India imposed “uniquely burdensome” non-tariff barriers, the removal of which will increase US exports by at least $5.3 billion annually, the White House said.
The tariffs would remain in effect until Trump determined that the “threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated,” the statement added.
The US has a trade deficit of $46 billion with India.
The reciprocal tariff will add pressure on Indian prime minister Narendra Modi, who counts himself among Trump’s friends, to find ways to get India off the hook.
Last week Reuters reported that New Delhi is open to cutting tariffs on US imports worth $23 billion to mitigate the impact on its exports in sectors like gems and jewellery, pharmaceuticals and auto parts.
Modi’s administration has taken a number of steps to win over Trump by lowering tariffs on high-end bikes, bourbon whiskey and dropping a tax on digital services that affected US tech giants.
Before the reciprocal announcement, the US tariff rates were among the lowest, with simple average tariffs at 3.3 per cent, compared with India’s 17 per cent, the White House said.
Ajay Sahai, director general at the Federation of India Export Organisations, said the reciprocal tariff on India was lower than key competitors like Vietnam and Bangladesh, which could help Indian apparel and footwear sectors.
The commerce ministry is analysing the impact of reciprocal tariffs imposed by the US on India, a senior government official said on Thursday (3).
“The ministry is analysing the impact of the announced tariffs,” the official said, adding there is a provision that if a country would address the concerns of the US, the Trump administration can consider reducing the duties against that nation.
India is already negotiating a bilateral trade agreement with the US. The two countries are aiming to finalise the first phase of the pact by fall (September-October) of this year.
“It is a mixed bag and not a setback for India,” the official said.
The US President listed the high tariffs charged by India on American products as he announced reciprocal tariffs on countries across the board.
“This is Liberation Day, a long-awaited moment. 2nd April 2025 will forever be remembered as the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to make America wealthy again,” Trump said on Wednesday in remarks from the Rose Garden at the White House. (Agencies)
