By Aftab Ahmed, Manoj Kumar and Shubham Batra
NEW DELHI (Reuters) – The U.S. slapped a 26% reciprocal tariff on India in a setback to the South Asian country’s expectation of getting relief from President Donald Trump’s global trade policy that has unnerved world markets for weeks.
The reciprocal tariff will be effective from April 9, according to a statement from the White House.
Trump’s Wednesday announcement on India was part of his wider plan to impose a 10% baseline tariff on all imports from April 5 and higher duties on certain other countries including 34% on China and 46% on Vietnam.
“They (India) are charging us 52% and we charge almost nothing for years and years and decades,” Trump said at the White House while announcing the reciprocal tax.
The duty of 26% was based on tariff and non-tariff barriers including currency manipulation, the Trump administration said.
India imposed “uniquely burdensome” non-tariff barriers, the removal of which will increase U.S. exports by at least $5.3 billion annually, the White House said in a statement.
The tariffs would remain in effect until Trump determined that the “threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated,” the statement added.
The U.S. has a trade deficit of $46 billion with India.
The reciprocal tariff will add pressure on Indian Prime Minister Narendra Modi, who counts himself among Trump’s friends, to find ways to get India off the hook.
Last week Reuters reported that New Delhi is open to cutting tariffs on U.S. imports worth $23 billion to mitigate the impact on its exports in sectors like gems and jewellery, pharmaceuticals and auto parts.
Modi’s administration has taken a number of steps to win over Trump by lowering tariffs on high-end bikes, bourbon and dropping a tax on digital services that affected U.S. tech giants.
Before the reciprocal announcement, the U.S. tariff rates were among the lowest, with simple average tariffs at 3.3%, compared with India’s 17%, the White House said.
Nigel Green, CEO of global financial advisory deVere Group, said the U.S. duties risked pushing India closer to alternative trade blocs and strategic partners.
“(This) makes Indian exports immediately less competitive … it dents investor confidence just as India is trying to attract global capital fleeing China,” he said.
Ajay Sahai, director general at the Federation of India Export Organisations, said the reciprocal tariff on India was lower than key competitors like Vietnam and Bangladesh, which could help Indian apparel and footwear sectors.
(Reporting by Aftab Ahmed, Shubham Batra, and Manoj Kumar in New Delhi; Editing by Stephen Coates)
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