- Thursday, April 03, 2025
US president Donald Trump has said the tariff announcements will amount to a ‘Liberation Day’ for the country
By: India Weekly
GOODS from sectors, including agriculture, precious stones, chemicals, pharma, medical devices, electricals, and machinery, may get impacted if the US goes ahead with imposing reciprocal tariffs on Indian products, according to experts.
They said these sectors could face additional customs duties from the Trump administration because of the high tariff differential, which is the difference between the import duties imposed by the US and India on a product.
At the broad sector level, the potential tariff gaps between India and the US vary across sectors.
The gap is 8.6 per cent for chemicals and pharmaceuticals; 5.6 per cent for plastics; 1.4 per cent for textiles and clothing; 13.3 per cent for diamonds, gold, and jewellery; 2.5 per cent for iron, steel, and base metals; 5.3 per cent for machinery and computers; 7.2 per cent for electronics; and 23.1 per cent for automobiles and auto components.
“The higher the tariff gap, the worse affected a sector could be,” an exporter said.
US president Donald Trump has said the tariff announcements, scheduled for early morning Thursday (India time), will amount to a ‘Liberation Day’ for the US.
According to an analysis of the think tank Global Trade Research Initiative (GTRI), the hardest-hit sector in agriculture would be fish, meat, and processed seafood, with $2.58 billion in exports in 2024, facing a 27.83 per cent tariff differential.
Shrimp, a major export to America, will become significantly less competitive due to the imposition of US tariffs.
“Already our exports have anti-dumping and countervailing duties in the US. The additional hike in tariffs will make us uncompetitive.
“Out of India’s total shrimp exports, we ship 40 per cent to America,” Kolkata-based seafood exporter and MD of Megaa Moda Yogesh Gupta said.
He said Indian exporters may get some relief if the US will impose similar tariffs on competitor countries – Ecuador and Indonesia.
India’s processed food, sugar, and cocoa exports may also face the heat as the tariff gap is 24.99 per cent. Its exports stood at $1.03 billion last year.
Similarly, cereals, vegetables, fruits, and spices ($1.91 billion shipments) have a tariff differential of 5.72 per cent between.
Dairy products, with exports worth $181.49 million, could be “severely” affected by a 38.23 per cent differential, “making ghee, butter, and milk powder costlier and reducing their market share in the US,” GTRI Founder Ajay Srivastava said.
The other products which can be affected include edible oils ($199.75 million exports and 10.67 duty gap); alcohol, wines, and spirits ($19.2 million exports and 122.10 per cent tariff differential); live animals and animal products ($10.3 million exports and 27.75 per cent gap).
Srivastava said that tobacco and cigarettes, whose exports are valued at $94.62 million in 2024, may remain unaffected, as the US already imposes 201.15 per cent tariffs, creating a negative tariff differential (-168.15 per cent).
In the industrial goods segment, sectors could be impacted by American duties, including pharmaceuticals, jewellery, and electronics.
“We are keeping our fingers crossed because of the unpredictability of the Trump administration at the tariff front. But if it will be imposed, it may affect initially but not in the longer run. The whole burden, though will be on American consumers,” Mumbai-based engineering exporter SK Saraf said.
The pharmaceutical sector, India’s largest industrial export, worth $12.72 billion in 2024, faces a 10.90 per cent tariff differential, increasing costs for generic medicines and specialty drugs.
Diamonds, gold, and silver, with $11.88 billion in exports, may see a 13.32 per cent tariff hike, raising jewellery prices and reducing competitiveness.
Similarly, electrical, telecom, and electronics exports worth $14.39 billion face a 7.24 per cent tariff.
According to the GTRI, machinery, boilers, turbines, and computers, with a worth $7.10 billion of exports, could see a 5.29 per cent tariff hike, impacting India’s engineering exports.
“Chemicals (excluding pharmaceuticals), exports worth $5.71 billion, could be affected by a 6.05 per cent tariff, reducing US demand for Indian specialty chemicals,” GTRI’s Srivastava said, adding that textiles, fabrics, yarn, and carpets, with $2.76 billion in exports, can face a 6.59 per cent tariff, making Indian textiles pricier.
Rubber products, including tyres and belts, shipments worth $1.06 billion, may face a 7.76 per cent tariff, while paper and wood articles ($969.65 million) could have see a 7.87 per cent tariff.
“Ceramic, glass, and stone products, with $1.71 billion in exports, will face an 8.27 per cent tariff, impacting demand. Footwear, with $457.66 million in exports, faces a high 15.56 per cent tariff differential,” he added.
Srivastava, however, said reciprocal tariffs may not be exactly the same as the tariff differential as the US has indicated that they may also factor in non-tariff barriers, VAT (GST), and currency impacts in its reciprocal tariff policy.
From 2021-22 to 2023-24, the US was the largest trading partner of India. The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.
With America, India has a trade surplus (difference between imports and exports), of $35.32 billion in goods in 2023-24.
It was $27.7 billion in 2022-23, $32.85 billion in 2021-22, $22.73 billion in 2020-21 and $17.26 billion in 2019-20. (PTI)
