Impact of US Tariffs: Which Indian Sectors Will Suffer the Most, and Which Will Get Relief?
Summary
The United States, under President Donald Trump, has announced retaliatory tariffs ranging from 10% to 49% on its trading partners. As part of this, India faces a 26% tariff on exports to the US. These tariffs are expected to negatively impact major Indian export sectors, although some industries have received temporary relief. However, the future remains uncertain for all. Let’s explore the full impact of these tariffs on India.
Detailed Analysis
President Trump has imposed fresh tariffs on imported goods sold in the US, including reciprocal tariffs on India. A uniform tariff of 26% will now be applied to all Indian exports to America. While some Indian goods have been exempted, the broader implications of these tariffs remain concerning.
US-India Tariff Dynamics
According to the White House:
- The US imposes a 2.5% tariff on passenger vehicles from India, while India charges 70% on US vehicles.
- Indian apples enter the US duty-free, but India imposes a 50% tariff on US apples.
- The US levies a 2.7% duty on Indian rice, whereas India imposes 80% on US rice.
- The US has 0% tariffs on networking switches and routers, but India charges 10-20% on similar imports.
- The US trade deficit with India stands at $46 billion.
Which Indian Sectors Will Be Most Affected?
The 26% US tariff will pose challenges for key Indian industries, especially:
- Electronics ($14 billion in exports)
- Gems & Jewellery ($9 billion in exports)
However, auto parts and aluminium products will not be impacted by the new 26% tariff but will still face the previously announced 25% duty.
Industries exempted from these new tariffs include:
- Pharmaceuticals ($9 billion in exports)
- Energy products
According to the Global Trade Research Initiative, the US currently imposes tariffs of:
- 1.05% on automobiles
- 2.12% on gems & jewellery
- 1.06% on chemicals & pharmaceuticals
- 0.41% on electronic products
Comparison with Other Asian Countries
The US has imposed higher tariffs on several Asian nations, including:
- China: 34%
- Japan: 24%
- Thailand: 36%
- Bangladesh: 37%
- Malaysia: 24%
- Taiwan: 32%
- South Korea: 25%
- Vietnam: 46% (highest)
- European Union: 20%
The White House has also criticized India’s stringent testing and certification laws in sectors like chemicals, telecom products, and medical devices, claiming they make it difficult for US companies to do business in India. The US government estimates that removing these barriers could increase American exports to India by at least $5.3 billion annually.
