US Tariff Exemption Expectations: Will India Benefit?
As the US reciprocal tariffs are set to take effect on April 2, there is anticipation that exemptions may be granted to certain countries. This could potentially boost US-bound exports.
Trump Administration’s Tariff Actions
With the slogan “America First,” Donald Trump was elected as the US President for a second term. Immediately after assuming office, he initiated a trade war with China, imposing a 10% tariff on all Chinese goods starting February 1. This was increased to 20% within 30 days. Subsequently, he imposed strict tariffs on Canada and Mexico as well.
Although Canada and Mexico were subjected to a 25% tariff, the US temporarily suspended tariffs on goods covered under the US-Mexico-Canada Agreement (USMCA) until April 2. Additionally, a planned 10% tariff on Canadian oil and natural gas was also postponed.
India’s Position
To resolve trade disputes arising from tariff impositions, India and the US initiated discussions under the “India-US Fast Track Mechanism.” Since India exports more to the US than it imports, reciprocal tariffs pose a challenge to its economy.
Trump had earlier criticized India for imposing high tariffs, but in bilateral negotiations, India has been making efforts to reduce tariffs on US goods.
Key Measures Taken by the Indian Government
- Withdrawal of Google Tax: India revoked the “equalization levy” imposed on US tech giants such as Amazon and Meta.
- Harley-Davidson Tariff Reduction: The import tariff on Harley-Davidson motorcycles was reduced by 10%.
- Bourbon Whiskey Tariff Reduction: The import tariff was reduced from 150% to 100%.
Future Economic Growth Prospects
India and the US aim to increase bilateral trade to $500 billion by 2030. If tariff exemptions are granted, Indian exports could see significant growth.
Additionally, the tariff exemption decision will be crucial for India’s automobile industry. Trump’s announcement of a 25% tariff on vehicle imports could adversely impact the Indian auto sector. It remains to be seen whether the US will provide any relief in this regard.
Conclusion
As the US tariffs take effect on April 2, the extent of exemptions granted to certain countries will soon be revealed. If bilateral negotiations succeed, India-US trade relations could reach new heights.
