Trump’s “reciprocal tariffs” target all major U.S. trade partners, citing trade deficits and protectionist policies. India faces a 26% tariff due to high agricultural tariffs, unpredictable rate changes, weak IP enforcement, restricted FDI, and digital shutdowns. Even nations with trade surpluses with the U.S. face increased tariffs.
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US President Donald Trump announced “reciprocal tariffs” against all major trading partners.
The US runs a trade deficit of around $1.2 trillion -> Trade deficit is the difference between the value of goods the US exports and the value of goods the US imports.
There were two sets of tariffs announced.
President Trump said he is only levying half of the tariffs that he believes other countries are imposing on the US. These country specific tariffs will be enforced from April 9 onwards.
The Table lists the main countries against which the US announced reciprocal tariffs, in descending order of tariffs imposed.
Cambodia — with a per capita income of just $2,950 and accounting for just 1% of the overall US trade deficit — has been hit with the highest level of tariffs.
Bangladesh — with an even lower per capita income and accounting for half a per cent of the overall US trade deficit — has got a tariff of 37%.
China (with a much higher per capita income and accounting for almost 25% of the total US deficit) and the EU (with an even higher per capita income and accounting for almost 20% of US trade deficit) have been hit with 34% and 20% tariffs respectively.
There were only three countries/ regions — China, EU and Vietnam — that accounted for the US trade deficit in double digits. And there were only two countries — Switzerland and Singapore — that were richer than the US in per capita terms.
Even countries with whom the US enjoys a trade surplus — that is, it exports more than it imports from them — have not been spared from a sharp increase in tariffs. These include the UK, Brazil, Singapore, and Colombia.
India has been hit with a tariff rate of 26%. Trump shared a report of the US Trade Department that gave details of why each country was being tariffed. The report came down heavily on the Government of India’s increasingly protectionist stance since 2014.
Key statements about India
India’s World Trade Organization (WTO) bound tariff rates on agricultural products are among the highest in the world, averaging 113.1% and ranging as high as 300%.
India’s tariff rates are announced with the annual budget and are modified on an ad hoc basis through notifications in the Gazette of India without opportunity for comment.
India lacks a comprehensive government procurement policy and, as a result, its procurement practices and procedures vary among different ministries within the central government.
India’s overall IP (intellectual property) enforcement remains inadequate. India imposes certain restrictions on foreign direct investment (FDI) in the retail industry.
Although India allows privately held banks to operate in the country, the banking system is dominated by state-owned banks, which account for approximately 60% of total market share and 67% of all Indian bank branches. Most privately owned banks are Indian owned, with foreign banks constituting less than 0.6% of the total bank branches in India.
India maintains an unlevel playing field in the insurance market. State-owned companies are not subject to the same law and prudential supervision as private firms and enjoy various guarantees from the government.
India provides a broad range of subsidies and support to its agricultural sector, including credit subsidies, debt waivers, crop insurance, and subsidies for inputs (such as fertilizer, fuel, electricity, and seeds) at both the Union government and state government levels.
India has conducted a number of localized shutdowns of the Internet in recent years. These shutdowns restrict access to information and services, disrupting commercial operations, and thereby undermining a free and open Internet and impeding trade in the digital economy.
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