India may hope for a reprieve from US’ reciprocal tariffs on April 2, at least partially, if trade and tariff negotiations go well with the visiting team of American officials led by Assistant US Trade Representative Brendan Lynch this week.
US President Donald Trump’s recent assurance that he may give a “lot of countries” a break and charge them relatively less reciprocal tariffs augurs well for the talks but much depends on how they play out, sources said.
“I may give a lot of countries breaks, but it’s reciprocal. But we might be even nicer than that…. We may take less than what they’re charging because they’ve charged us so much, I don’t think they could take it,” he said at a White House briefing on Monday.
Tariff threat
In the same breath, he said the tariffs would be substantial, and more can be understood about that on April 2.
Some experts warn that India should not let down its guard and be ready with its strategy as Trump never showed his hand fully.
“India has been hopeful of avoiding the April 2 reciprocal tariffs as the US had agreed last month to negotiate a bilateral trade agreement. Productive negotiations with the US team this week may yield positive results on the reciprocal tariff front now that there are signs of some flexibility,” a source tracking the matter said.
After taking over as US President earlier this year, Trump had said that he would impose reciprocal tariffs on “high tariffing countries”, including India, on April 2 matching their import tariffs.
Average tariff
If matched, the reciprocal tariffs could be significant for India. US’ simple average tariff on imports is 3.3 per cent while India’s is over five times higher at 17 per cent, per WTO figures. Average applied tariffs on agricultural goods by India is much higher at 39 per cent while the US duties are at 5 per cent.
While Trump has indicated that he might actually not end up matching tariff for tariff and give a break to a lot of countries, it must not be taken at face value, cautions Biswajit Dhar, Distinguished Professor, Council for Social Development.
“Trump is never going to show his hand. He would try to extract the best deal. We have to be extremely careful as to on what terms we would negotiate. Our trump card is our large market and we must play it now,” he said.
In FY24, India exported goods worth $77.51 billion to the US and its imports were worth $42.19 billion leading to a deficit of $35 billion for the US.
