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Pune: Former US President and Republican candidate Donald Trump has once again made a major decision in international trade. The long-feared move has finally happened, which is expected to have a significant impact on global and Indian stock markets. The US has announced substantial import duties on India, China, and other major trading partners. Trump has named this decision the “Discounted Reciprocal Tariff.” This means that just as other countries impose tariffs on American products, the US will also impose tariffs, but for India, the rate will be slightly lower.
According to Trump, industries that contribute significantly to India’s exports will now have to face an additional 26% tariff. China will be subjected to a 34% tariff, the European Union 20%, Japan 24%, and the UK 10%. This new policy will be implemented in the first week of April. A 10% base tariff will be applicable to all countries starting April 5, while country-specific rates will be determined from April 9 onward.
A Major Shock for the Indian Economy
This decision could be a major blow to the Indian economy. Over the past decade, India-US trade relations have strengthened significantly. The US has been a crucial market for industries such as pharmaceuticals, auto parts, textiles, and chemicals. With the imposition of a 26% additional tariff, Indian products will become more expensive in the American market, potentially leading to a decline in exports.
Which Sectors Will Be Affected the Most?
- Pharmaceuticals – India is the world’s largest producer of generic medicines, and the US is its biggest customer. The new tariff will increase the costs for Indian pharmaceutical companies, benefiting American and European pharma firms.
- Auto Parts – The Indian automobile industry exports a significant amount of parts and vehicles to the US and Europe. Trump’s decision could create a major obstacle for Indian auto companies.
- Textiles & Home Furnishing – India’s textile industry has a strong presence in the US market. However, with a 26% tariff hike, Indian textile products will become expensive, giving an advantage to competing countries.
- Engineering & Chemicals – India exports a large volume of engineering goods and chemical products to the US. These sectors will also be impacted by the new tariffs.
What Is Trump’s Objective?
Trump has stated that this decision is aimed at boosting domestic industries in the US. He emphasized that the goal is to support local industries and create more jobs for American workers. According to him, this move will help “Make America Rich Again.”
What Will Be India’s Next Steps?
The Indian government has not yet issued an official response to the US decision. However, Commerce Minister Piyush Goyal may try to negotiate temporary agreements with the US before April 5. India might seek a resolution through the World Trade Organization (WTO) or bilateral talks.
Is This Decision Limited to India?
China and the European Union are already preparing to retaliate against the US’s new trade policy. China has started formulating new incentives and policies to support its exports. The key question now is whether India will engage in direct negotiations with the US or if the tariff war will escalate further.
Trump’s new tariff policy will undoubtedly impact India-US trade relations. The coming months will determine whether the Indian government can successfully negotiate to reduce the tariff burden or if Indian industries will have to find alternative markets. The challenge is significant, and India’s response will shape the future of its global trade strategy.
