Impending Reciprocal Tariffs Spark Major Economic Discussions Between U.S. and India
U.S. President Trump is set to implement reciprocal tariffs on April 2, targeting all countries, which may affect trade relations. Discussions between the U.S. and India aim to finalize a trade agreement by Fall 2025, raising concerns over potential impacts on both economies. The U.S. seeks tariff concessions while India aims to protect its industries ahead of negotiations.
As the April 2 deadline for reciprocal tariffs approaches, U.S. President Donald Trump plans to implement tariffs on “all countries,” not merely a select few as previously suggested. Trump asserted, “You’d start with all countries, so let’s see what happens,” indicating that these tariffs aim to address trade imbalances and promote U.S. manufacturing while funding domestic objectives, including tax reductions for the upcoming campaign.
Key officials have not yet provided detailed information regarding the targeted countries or the actual implementation dates of these tariffs. White House economic adviser Kevin Hassett mentioned that they would likely focus on around 10 to 15 nations with significant trade deficits, but specifics remain undisclosed. Possible repercussions of the tariffs have sparked concern, with experts warning that heightening trade barriers could adversely affect the global economy, as highlighted by UK Secretary of State Yvette Cooper.
India and the United States recently agreed to engage in sectoral discussions under a proposed bilateral trade agreement, aiming to enhance cooperation and address barriers to trade. This initiative follows extensive negotiations, with an objective to finalize the first phase by the fall of 2025 and increase bilateral trade to USD 500 billion by 2030. U.S. requests for tariff concessions cover a variety of sectors, while India seeks reductions in labor-intensive industries.
In anticipation of the tariffs, Indian exporters have urged their government to secure exemptions, given the U.S. is India’s largest trading partner. The U.S. desires broader access for its businesses in India’s agriculture sector; however, political sensitivity surrounding this area raises challenges. In 2024, significant agricultural exports to India included almonds, while India’s prominent exports to the U.S. comprised pharmaceuticals and textiles, alongside other goods. Overall, the bilateral trade reached USD 119.71 billion, with the U.S. enjoying a substantial trade surplus with India.
In summary, as President Trump’s reciprocal tariffs approach implementation, both the U.S. and India are navigating complex negotiations that could significantly impact their trade relationship. The U.S. aims to bolster its domestic interests through tariffs while seeking concessions from India, particularly in labor-intensive sectors. Meanwhile, India is striving to protect its industries from potential repercussions, recognizing the critical importance of the U.S. as a trading partner. These developments will shape the economic landscape in the coming years.
Original Source: www.livemint.com
