Trump’s Tariff War Hits India with 27% Duty

Why in the News ?

U.S. President Donald Trump announced sweeping reciprocal tariffs on global trade partners, including a 27% duty on Indian exports. Despite ongoing trade talks, India was not spared, prompting muted official responses while global markets reacted with sharp declines and concern.

Trump’s Tariff War Hits India with 27% Duty

About Trump’s Tariffs and Impact on India:

  • S. President Donald Trump announced reciprocal tariffs ranging from 10% to 49% on major trading partners.
  • India faces a 27% tariff on its exports despite ongoing talks for a bilateral trade agreement.
  • Trump cited India’s “high tariffs” on U.S. goods and invoked the International Emergency Economic Powers Act (1977) to justify the move.
  • April 2 has been termed “Liberation Day” by Trump, marking a rebirth of U.S. industry.

Global & Domestic Response:

  • The Commerce Ministry of India is examining the implications and consulting stakeholders.
  • India maintained a measured stance, unlike the EU, China, and Canada, which warned of countermeasures.
  • Japan and South Korea called the move “regrettable” and planned domestic support.
  • India hopes for opportunities due to lower tariffs compared to competitors like Vietnam (46%) and Thailand (37%).
  • Indian indices such as Sensex and Nifty declined sharply, mirroring global market panic.

Sectoral Impact and Future Course

  • The gems and jewellery sector, with over $10 billion in exports to the U.S., could be severely impacted.
  • The auto industry expects minimal impact, as auto parts were not included in the tariffs.
  • Boeing’s supply chain may be affected, potentially delaying aircraft deliveries.
  • Trump criticised India’s high MFN tariff rates (17%) and specific items like apples, rice, and motorcycles.
  • The GJEPC urged progress on the Bilateral Trade Agreement to protect long-term trade interests.