Holding up a chart during the event, Trump illustrated the disparities in tariffs levied by various nations such as India, China, the United Kingdom, and the European Union. The chart displayed how these countries would now be subjected to reciprocal tariffs by the US. According to the data Trump shared, India charges a hefty 52 per cent tariff on American products, factoring in elements such as currency manipulation and trade barriers. In response, the US has introduced a 26 per cent "discounted reciprocal tariff" aimed at "levelling the playing field".
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What did Trump say about Narendra Modi?
"India, very, very tough...Very, very tough...The Prime Minister (Narendra Modi) just left...He is a great friend of mine, but I said, your a friend of mine, but you’re not treating us right. They charge us 52%. You have to understand, we charge them almost nothing for years and years and decades, and it was only seven years ago, when I came in, that we started with China," Trump said at the White House.
US Treasury Secretary warns against Trump tariff retaliation
Following the announcement by President Trump, US Treasury Secretary Scott Bessent warned trading partners that retaliatory measures against the White House's newly imposed tariffs would only lead to further escalation. "My advice to every country right now is, do not retaliate. Sit back, take it in, let's see how it goes. Because if you retaliate, there will be escalation. If you don't retaliate, this is the high watermark," Bessent was quoted as saying by Fox News.
Potential impact on India
India has often been cited by the Trump administration as imposing high tariffs on a range of American products, including electronics, agricultural goods, and medical devices. Trump's announcement comes as part of a broader effort to confront nations he believes are taking advantage of the United States through trade imbalances and restrictive trade policies. The introduction of a 26 per cent reciprocal tariff by the US could have significant implications for India's trade sector.
Key sectors that are likely to feel the impact:
- Exports to the US: India's exports to the US, particularly in industries like textiles, pharmaceuticals, and IT services, are likely to face higher costs, which could make them less competitive in the American market.
- Negotiations and retaliation: The move could trigger a fresh wave of trade negotiations between the two countries. Alternatively, India may opt to respond with its own set of countermeasures.
- Investment climate: Increased tariffs may create uncertainty for companies operating across both nations, which can potentially affect investment decisions and business collaborations.
- Consumer impact: Higher tariffs can lead to increased costs for imported goods, which can potentially affect consumers and manufacturers reliant on specific US products.
What is reciprocal tariff?
A reciprocal tariff is a duty imposed by one country in response to the tariffs levied by another country on its exports. Essentially, it operates on a tit-for-tat basis where a nation attempts to counterbalance the economic impact of high tariffs imposed on its goods by charging a similar or proportional rate in return. Trump’s "discounted reciprocal tariff" is aimed at offsetting the tariffs that India allegedly imposes on American products. The US President emphasised that this new measure was a necessary step to protect American interests and promote fair trade.
(With inputs from agencies)
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