India will face reciprocal tariffs from the United States starting April 2, U.S. President Donald Trump announced Thursday, signaling a potential setback for Indian exports, particularly in agriculture and pharmaceuticals.
“I have a very good relationship with India, but the only problem I have with India is that they are one of the highest tariffing nations in the world. I believe they are probably going to be lowering those tariffs substantially, but on April 2, we will be charging them the same tariffs they charge us,” Trump said in an interview with Breitbart News.
The announcement comes as India’s Commerce and Industry Ministry works to resolve trade issues with the U.S. ahead of a bilateral trade agreement (BTA) both nations aim to finalize by the end of the year. However, Trump’s move casts doubt on any immediate tariff relief.
Impact on Key Industries
India’s steel and aluminum sectors are already affected by a 25% U.S. tariff, impacting $5 billion worth of exports. Domestically, the Indian government is considering a 12% duty on certain imported steel products, which could drive up prices.
A report from SBI Research highlights the widening tariff gap:
- U.S. tariff rates on Indian goods rose from 2.72% in 2018 to 3.91% in 2021, before slightly declining to 3.83% in 2022.
- India’s tariffs on U.S. imports increased from 11.59% in 2018 to 15.30% in 2022.
Despite the rising tariffs, India had signaled willingness to lower duties on select products during Trump’s meeting with Prime Minister Narendra Modi last month. New Delhi has already reduced tariffs on bourbon whiskey and motorbikes – key U.S. export interests.
Goldman Sachs: India Faces Multiple Risks
A Goldman Sachs report warned that India could face trade disruptions due to:
- National-level tariffs – A straightforward reciprocal approach.
- Product-specific tariffs – Potentially raising the tariff gap by 11.5 percentage points, but requiring more time to implement.
- Non-tariff barriers – Import licenses, administrative restrictions and export subsidies which could further complicate trade relations.
With Trump’s latest move, tensions between the two economic giants are set to escalate, raising uncertainty for Indian exporters ahead of the planned trade agreement.
