(All Indian goods entering the US will now attract a minimum 26% levy, beginning April 9, leaving businesses scrambling to assess the damage.)
Recalling his interaction with PM Narendra Modi on bilateral trade during the latter's visit to the US in February, President Donald Trump said,
"The Prime Minister just left. He's a great friend of mine, but I said, 'You're a friend of mine, but you're not treating us right'.
They charge us 52%. We charge them almost nothing for years and years and decades."
Trump announced a 26% "discounted" and "kind" reciprocal tariff on India on Thursday.
Speaking at the White House, Trump flagged that India imposes a 52% tariff on US imports, describing it as "very tough".
“This is one of the most important days, in my opinion, in American history,” Trump said in a long-winded speech on the White House lawn.
For decades America had been “looted, pillaged and raped” by its trading partners, he said.
“In many cases, the friend is worse than the foe.”
The reciprocal tariff rate of 26% includes a 10% universal tariff. The universal 10% tariff will come into effect on all imports into the US from April 5, and the remaining 16% from April 10.
The move is likely to hurt India's exports of agricultural and pharmaceutical goods to the US. Sectors such as steel and aluminium are already feeling the impact of the 25% tariffs imposed by Trump previously.
Moreover, a 25% tariff on auto imports and pa
rts will also be collected from April 3. From 2021-22 to 2023-24, the US was the largest trading partner of India. It accounts for about 18% of India's total goods exports.
SBI Research had earlier estimated a 3-3.5% decline in exports due to US tariffs.
There is, however, a "possibility" of Trump reducing duties if India addresses certain trade concerns.
Discussions between the two countries on a bilateral trade agreement are already underway, with both sides aiming to finalise the first phase of the deal by September-October this year.
Trump justified the move by highlighting the high tariffs India imposes on American products. While announcing the new duties, he referred to the 26% reciprocal tariff as a "discounted" rate for India.
During his speech at the White House’s Rose Garden on Wednesday, Trump declared the tariff decision as a historic moment for American industry.
"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," he said.
While explaining the decision, Trump held up a chart showing the tariff rates imposed by different countries on American goods, including those from India, China, the UK, and the European Union. The chart claimed that India charges 52% in tariffs, including trade barriers and currency policies, and that the US would now impose a 26% duty in response.
Trump also made specific comments about India’s trade policies and his discussions with the Indian prime minister.
"India, very, very tough. Very, very tough. The prime minister just left. He's a great friend of mine, but I said, you're a friend of mine, but you're not treating us right.
Reports suggest that India is considering slashing tariffs on $23 billion worth of US imports, including gems, jewellery, pharmaceuticals, and auto parts, in a bid to soften the blow.
Sanjay Nayar, President, Assocham, argued that the tariff plan announced by Donald Trump will impact India less in comparison to other countries.
"Tariffs unveiled by President Trump last night would bring a major realignment in global trade and manufacturing value chains. "India has been placed somewhere in the middle of the tariff rates at 26%, which need to be assessed for real impact," said Nayar.
''Net-net, it appears India's export competitiveness to the US market stands far less impacted on a relative basis. "Yet our industry should make concerted efforts to increase export efficiency and value addition to mitigate the impact of these tariffs," he said.
We can even expect a high impact on the pharma sector. While specific tariff percentages have not been detailed, the US is a significant market for Indian pharmaceutical exports. Increased tariffs potentially lead to a decline in export revenues.
However, it may be noted that the US administration has exempted pharmaceutical products from the list of imports hit by reciprocal tariffs.
Another sector that will be hit hard due to the tariffs is IT. The US has indicated potential tariffs on IT services, a sector where India has substantial exports.
The US reciprocal tariffs are set to have a multifaceted impact on India's economy, with significant effects on key export sectors and associated industries.
The magnitude of these impacts will depend on the duration of the tariffs and the ability of Indian industries to adapt to the evolving trade landscape.
ends
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