Opposition parties put pressure on the Modi government as they allege that the US is pressuring India to reduce tariffs and question the government’s silence over this. How bad is Trump’s new tariff for India?
Our Bureau
Washington, DC/New Delhi
On Wednesday, US President Donald Trump dropped a bombshell as he announced reciprocal tariffs across the globe. But Trump emphasized that the US economy and stock market would see growth. While speaking briefly with the media on Thursday, Trump took a question on the stock market drop following the tariffs and said, “I think it’s going very well,” and added that the United States will “have six or seven trillion dollars coming into our country.”
Amid worldwide criticism, Trump declared a national economic emergency and announced tariffs of at least 10 per cent across all countries, with rates even higher for 60 countries. The tariff plan imposed high levies on many countries, including 26 per cent on India, 49 per cent on Cambodia, 46 per cent on Vietnam, 34 per cent on China, 24 per cent tariff on Japan, 20 per cent on the EU, US media reported, noting that more than 180 countries and regions will face tariffs.
But following US President Donald Trump’s announcement of reciprocal tariffs, International Monetary Fund (IMF) Managing Director Kristalina Georgieva expressed concern over the impact on the global economy and said that the tariffs represent a “significant risk to the global outlook.”
Georgieva urged the United States and its trading partners to “work constructively to resolve trade tensions and reduce uncertainty.”
Now India will be taxed a reciprocal tariff of 27 per cent. Goods such as steel, aluminium, and auto-related goods from India will face a 25 per cent tariff, and pharmaceuticals, semiconductors, copper, or energy products shall remain out of the reciprocal tariffs purview for now.
The Indian stock indices closed Thursday’s session lower, weighed down by the heat of the US administration’s reciprocal tariffs imposed on partner countries, including India.
“The market’s measured response to the US tariffs reflects expectations of ongoing trade discussions between India and the US, as well as the possibility of higher tariffs impacting other countries more significantly, limiting the impact on Indian exports, said Ajit Mishra – SVP, Research, Religare Broking Ltd.
“The primary catalyst for today’s decline was deteriorating global sentiment, exacerbated by US President Trump’s announcement of a 27 per cent reciprocal tariff on Indian imports. Additionally, a 25 per cent tariff on auto component imports further dampened market sentiment, prompting a cautious stance among investors,” said Sundar Kewat, Technical and Derivatives Analyst, Ashika Institutional Equity.
But the opposition parties are now putting pressure on the government, demanding answers and action.
Congress leader and Leader of Opposition in Lok Sabha Rahul Gandhi said on Thursday that the United States’ decision to impose reciprocal tariffs will “completely devastate our economy” with the auto industry, pharmaceuticals and agriculture among sectors expected to face the brunt. He asked the government what it is doing about this tariff.
“Our ally has suddenly decided to impose a 26 per cent tariff, which is going to completely devastate our economy–our auto industry, pharmaceutical industry, and agriculture are all on the line,” Rahul Gandhi said in Lok Sabha
“This is part of their culture and history we know that. But we would like an answer from the government of India, what are you doing about our land? What are you going to do about this tariff that our ally has imposed on us,” he asked.
Aam Aadmi Party leader Raghav Chadha on Thursday took a swipe at the US imposing reciprocal tariffs on India and recalled lines of a popular Hindi number while stating that “Trump Tariff” could wreck the Indian economy. “We offered unflinching loyalty, but in return, the Trump Administration has imposed the Trump Tariff that could wreck the Indian economy,” he added.
Congress MP Manish Tewari on Thursday urged the Centre to develop “a spine” and stand up to the US, which imposed 26 per cent tariffs on goods from India. The Congress leader said that the tariffs on India represented “abject failure” of the negotiations between the two countries.
“It represents an abject failure of the negotiations that were taking place between the US and the govt of India,” Tewari said. “The US has imposed tariffs, expelling our students, and cancelling visas without any provocation, and the govt is absolutely silent… The government needs to develop a spine and stand up to the US,” he added.
Congress’ Rajya Sabha MP Randeep Surjewala also expressed concern and criticized Prime Minister Narendra Modi over the issue. Surjewala said, “The 27 per cent plus tariff imposed by India’s biggest trading partner is a big matter of concern. Indian Import is going to experience an impact of Rs 26,000 crore to Rs 35,000 crore. What is the Modi government doing? Whenever the country faces danger, Modi ji become silent. PM Modi ji went to the US, then the US President called India a tariff abuser in his presence. They send our migrants back in handcuffs like animals. Now, the 27 per cent tariffs by America are a matter of concern.”
Surjewala further alleged that the US has been pressuring India to reduce tariffs and questioned the government’s silence over this. “On the other hand, America is pressuring India to accept their agricultural export like wheat, cotton. They are pressuring India to end the import duty on Pharmaceuticals. Modi government is not answering any questions about this,” he said.
But faced with US President Donald Trump’s reciprocal tariffs, India on Thursday said that it is studying the opportunities that may arise from this new development in US trade policy. The Ministry of Commerce said in a statement that it is carefully examining the implications of the various measures and announcements made by the US administration.
“The US President issued an Executive Order on Reciprocal Tariffs imposing additional ad-valorem duties ranging from 10% to 50% on imports from all trading partners. The baseline duty of 10% will be effective from April 05, 2025, and the remaining country-specific additional ad valorem duty will be effective from April 09, 2025. The additional duty on India, as per Annex I of the Executive Order, is 27%,” the Ministry said.
“The Department of Commerce is carefully examining the implications of the various measures/announcements made by the President of the USA. Keeping in view the vision of Viksit Bharat, the Department is engaged with all stakeholders, including the Indian industry and exporters, taking feedback of their assessment of the tariffs and assessing the situation. The Department is also studying the opportunities that may arise due to this new development in the US trade policy,” the Ministry added.
Prime Minister Narendra Modi and US President Donald Trump had announced ‘Mission 500’ on February 13, 2025, aiming to more than double bilateral trade to USD 500 billion by 2030.
“The ongoing talks are focused on enabling both nations to grow trade, investments and technology transfers. We remain in touch with the Trump Administration on these issues and expect to take them forward in the coming days,” the statement added.
US tariffs provide Indian exporters with a competitive advantage over rival nations, said SC Ralhan, the President of the Federation of Indian Export Organizations (FIEO), adding that the movement is ‘quite favorable’.
The FIEO President expressed optimism about the impact of the tariffs on Indian exports, noting that while India faces a tariff of around 27 per cent, this remains manageable compared to the higher tariffs imposed on competing nations, particularly China.
The import tariffs imposed on peer Asian economies are more compared to the tariff rate of 27 per cent on India could be an advantage to us, he added.
“We have an advantage in that whatever the advantage China had with cheap raw materials, that advantage is gone. I think this is good,” Ralhan said, adding that Indian manufacturers have an opportunity to increase the trade share.
US President Donald Trump’s reciprocal tariffs will impact the American economy more, leaving them with limited buying options to cater for their needs according to Ranjeet Mehta, CEO and Secretary General of industry body PHDCCI.
“If you look at the first impact, it is going to impact the American economy itself, first of all. The consumers today who have the liberty to buy the products from anywhere in the world, wherever they are getting cheaper. However, by levying these tariffs, I think that it is going to be more expensive for the American economy itself,” Mehta told ANI.
Mehta said that President Trump has made everyone talk about him by announcing these tariffs. As far as India is concerned, PHDCCI General Secretary said he thinks it is good for the pharma sector that it has been left out of the tariff ambit.
He said the Trump tariffs will impact the gems and jeweler, textile, and electronics sectors in particular. Amidst this tumultuous time, he sees “light at the end of the tunnel”, given that both countries are negotiating on a bilateral trade agreement (BTA) by the fall of 2025.
