US President Donald Trump’s imposition of a 26% reciprocal tariff on Indian goods. It came as a shock to the Indian business fraternity. He showcased a chart illustrating proposed reciprocal tariffs. After Which he announced ‘Liberation Day’. Donald Trump declared that foreign nations have “looted, pillaged, raped, and plundered” the United States. Additionally he stated, “April 2nd, 2025, marks the day we rebirthed American industry, reclaimed America’s destiny, and began to Make America Wealthy Again.”
Trump On India
“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. They charge us 52%. You have to understand, we charge them almost nothing for years and years and decades, and it was only seven years ago, when I came in, that we started with China.”
Which sectors does the exemption apply to?
As of now, Trump had exempted Pharmaceutical exports from the reciprocal tariff. It has come as a relief for Indian companies like Sun Pharma (33% of revenue from US), Dr Reddy’s Laboratories (48.5%) and Aurobindo Pharma (48.3%). The latest tariff announcements also exempt steel, copper, bullion, energy, and certain other minerals.
Which sectors will Trump’s reciprocal tariffs impact?
Electronics: The electronics sector in India relied on the US for 32% of its exports in the financial year ended March 2024. Trump’s decision will impact this sector.
Textiles And Apparels: India’s textile and apparel industry could gain a competitive edge over China and Vietnam, as the US has raised tariffs on Chinese goods by 34% and on Vietnamese goods by 46%. However, Indian truck exporters may face challenges due to higher tariffs imposed by the US.
Agriculture and food processing: India exports products like rice, spices, and seafood to the US could face higher tariffs.
Electronics and machinery: Increased tariffs on Chinese goods could shift US demand to Indian manufacturers.
Steel and aluminum: The US imposed a 25% tariff on steel and 10% on aluminum imports in 2018, majorly affecting Indian exporters.
