US will impose reciprocal tariffs from April 2: Trump

Context

U.S. President Donald Trump criticised the high tariffs charged by India and other countries, terming them as “very unfair” and announced reciprocal tariffs from April 2 on nations that impose levies on American goods.

Mr. Trump made these remarks in an address to the Joint Session of the Congress on Tuesday. It was the first address of his second term in the White House. Mr. Trump was sworn in as the 47th President of the U.S. on January 20.

“If you don’t make your product in America, however, under the Trump administration, you will pay a tariff and in some cases, a rather large one,” Mr. Trump said. “Other countries have used tariffs against us for decades and now it’s our turn to start using them against those other countries. On average, the European Union, China, Brazil, India, Mexico and Canada — have you heard of them? And countless other nations charge us tremendously higher tariffs than we charge them,” the U.S. President said.

Status of Trade between India & USA

What are Reciprocal Tariffs?

Reciprocal tariffsrefertothe UStaxingthe importingnation by the same tax ratewithwhich they are taxing the US.

This systemwouldbringUS tariffs on importsin linewithothernations'tax rates

Tariffequivalenceacrossvariousproducts couldraisethe average tariff rateof the United Statesbyabouttwo percentage points.

PossibleImpacton India

Higher tariffs:Indiaisoneofthecountrieswith significantly higher relative tariff rates and henceisvulnerabletoretaliatory tariffs. India's weighted average effective tariff on US exports to India is9.5%comparedwith a 3% tariff rate on India's exports to the US

Weaksectors:It couldhitIndia'sautomobile, textile, and otherindustries. Forinstance, if Indiawereto slap a 25% tariff on US automobiles, the US wouldthenslapa 25% tariff onUSimports ofIndianautos.

Widerimpact:Tariffsreciprocalwouldleadtothe dooropeningto "ageneraltariffincrease" on emerging economies thatchargehightariffson USgoods.