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Reciprocal Tariffs
Context
US will impose reciprocal tariffs on all countries, including India. This means India will face higher duties on its exports to the US, affecting key industries.
What are Reciprocal Tariffs?
- Reciprocal tariffs ensure fair trade by matching the import duties imposed by other countries.
- If a country charges high tariffs on US goods, the US will impose the same level of tariffs on that country’s exports.
- The goal is to prevent unfair advantages and create a balanced trading system.
How does this affect India?
- Trump has criticized India for imposing over 100% tariffs on US automobile exports. India is one of the most affected countries due to its high tariff gap with the US.
- Sectors like gems & jewellery, automobiles, chemicals, and pharmaceuticals will be hit hardest.
- India could lose up to USD 7 billion per year due to reduced exports.
- This could slow down GDP growth by 5-10 basis points in FY 2025-26.
- What does India export to the US?
- Total exports (2024): USD 74 billion
- Key exports at risk:
- Pearls, gems, and jewellery: USD 8.5 billion
- Pharmaceuticals: USD 8 billion
- Petrochemicals: USD 4 billion
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