Impending Tariffs Could Cost India $7 Billion Annually Starting April 2

President Trump’s upcoming reciprocal tariffs on April 2 are expected to impact India’s economy significantly, with potential losses estimated at $7 billion annually. This policy could adversely affect key sectors such as chemicals, automobiles, and agriculture. The Indian government is proactively seeking negotiations to reach a bilateral trade agreement to mitigate tariff impacts and enhance trade relations with the United States.

On April 2, President Trump’s intention to impose reciprocal tariffs is anticipated to affect India significantly, potentially costing the nation approximately $7 billion annually. Trump articulated his stance, stating that other countries have utilized tariffs against the United States for years, underscoring the disparity in tariff rates between the U.S. and nations such as India. He declared, “India charges us auto tariffs higher than 100 percent,” signifying his administration’s intent to correct these perceived injustices starting on the aforementioned date.

This forthcoming tariff imposition is fostering apprehension within various sectors of the Indian economy, spanning from automotive to agriculture. Analysts from Citi Research have predicted potential annual losses for India amounting to $7 billion. The sectors most vulnerable to the anticipated tariffs include chemicals, metal products, and jewelry, with other sectors such as automobiles and pharmaceuticals likely to experience adverse impacts as well.

India’s export landscape is characterized by a significant tariff differential with the United States, with India’s average tariff exceeding U.S. tariffs by over 10 percentage points. The country has thus far avoided becoming a target of U.S. tariffs, but this is set to change on April 2. Analysts project that India could face tariff increases of around 4 to 6 percentage points as a result of the U.S. policy changes.

In a broader context, India and Thailand may experience additional pressure from U.S. tariff policies, reflecting a trend that could extend beyond agriculture to other manufactured goods. The United States already charges much higher tariffs on certain products compared to India, particularly in sectors such as footwear and food items. Reports indicate that U.S. tariffs on farm products substantially exceed Indian tariffs, hinting at the potential for heavy losses for India’s agricultural exports.

To address these issues and possibly deter the imposition of tariffs, Indian Trade Minister Piyush Goyal has engaged with U.S. officials. Goyal’s visit to Washington aims to negotiate terms that could alleviate tariff pressures while discussing potential concessions. India is open to various discussions regarding tariff reductions on industrial products but is resistant to lowering agricultural tariffs, emphasizing the negative impact on its farming community.

Ultimately, officials aspire to solidify a bilateral trade agreement to enhance economic collaboration and ensure that the potential difficulties arising from the new tariffs are mitigated. Progress towards this agreement could help shield India from the impending duties, although finalization of such deals may not occur by the April deadline.

In summary, President Trump’s announcement regarding reciprocal tariffs is poised to impact India’s economy significantly, potentially resulting in losses varying between $2 billion and $7 billion per year. Key export sectors, particularly agriculture and manufacturing, are facing heightened vulnerability due to the upcoming tariff changes. As India navigates these challenges, efforts to negotiate a bilateral trade agreement with the United States are shaping up as critical for mitigating these financial repercussions and enhancing economic cooperation between the two nations.

Original Source: m.economictimes.com