India should respond with equal measures if the newly elected U.S. President Donald Trump imposes higher tariffs on domestic goods, trade experts say.
They noted that India has previously implemented retaliatory customs duties on several U.S. products, such as apples, in response to what it deemed “illegal” tariffs imposed by America on certain steel and aluminium products.
In December last year, Mr. Trump has said India charges “a lot” of tariffs, reiterating his intention to impose reciprocal tariffs in retaliation for what New Delhi will impose on the import of certain American products.
“India should respond firmly and in equal measures,” economic think tank Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.
In 2018, when the U.S. taxed Indian steel and aluminium, India retaliated by raising tariffs on 29 U.S. products, recovering equivalent revenue.
“This measured response showed India’s capability to protect its trade interests while staying balanced,” Mr. Srivastava said.
He added that Indian exporters may face high customs duties for goods like automobiles, textiles and pharmaceuticals if the new U.S. administration decides to pursue the ‘America First’ agenda.
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He also said that if Mr. Trump would tighten H-1B visa rules, it may impact the growth of Indian IT firms.
Over 80% of India’s IT export earnings come from the U.S. The U.S. is India’s largest trading partner, accounting for over $190 billion of annual trade.
Sharing similar views, international trade expert Abhijit Das said that additional duties by the U.S., if implemented, will lock the market for Indian goods.
“Of course, India should retaliate with equal measures,” Mr. Das said, adding that imposing retaliatory customs duties would strengthen India’s position in negotiating the removal of “illegal” tariffs in the future.
“In the case of imposition of duties by the U.S., India should explain why those are illegal and if not withdrawn, we should not hesitate in taking retaliatory measures,” he said adding Mr. Trump has complaints in several sectors like agri goods, industrial products, services, intellectual property rights and digital trade.
Consult stakeholders
Another expert said that the Indian government should do a comprehensive consultation with the stakeholders and prepare itself to deal with any such move by the new American authorities.
Trade experts further stated that Mr. Trump’s claim that India is an “abuser” of import tariffs is unfair as many nations including America protect their domestic industries by imposing high customs duties on certain products. In October 2020 also, Mr. Trump labelled India as the ‘tariff king’.
According to WTO’s World Tariff Profiles 2023, the U.S. also imposes high duties on items like dairy products (188%), fruits and vegetables (132%), coffee, tea, cocoa and spices (53%), cereals and food preparations (193%), oilseeds, fats and oils (164%), beverages and tobacco (150%), fish and fish products (35%), minerals and metals (187%), and chemicals (56%).
International trade expert Biswajit Dhar also said that Trump would increase tariffs in various sectors as he has to follow his call for MAGA (Make America Great Again).
“India has a trade surplus with the US and they have flagged this issue earlier several times. We have always favoured consultations, we have not done things unilaterally. But if things do not work out, we should also consider proportionate measures,” Mr. Dhar said.
However, certain exporters are of the view that Mr. Trump will not go ahead with its threat as a number of U.S. companies have shown interest to invest in India and any move to impose duties will impact them also.
“I think, India-US trade relations will be strengthened further,” Federation of Indian Export Organisations (FIEO) President Ashwani Kumar said.
The exporters added that in fact, India will get an opportunity to increase exports to the U.S. if America would impose higher duties on Chinese goods.
Going by the data, during 2001-23, at a Compounded Annual Growth Rate (CAGR), India’s exports to America rose by 10.48%. In this period, the US imports from the world have grown by 4.76 per cent.
They added that the two economies have strongly integrated with each other through various agreements, including the IPEF (Indo-Pacific Economic Framework for Prosperity) and other bilateral mechanisms.
The U.S. is the largest trading partner of India in 2023-24. India’s exports stood at $77.51 billion, while imports aggregated at $42.2 billion in the last fiscal.
During April-December this fiscal, the country’s exports to America rose by 5.57% to about $60 billion, while imports grew by about 2% to $33.4 billion.
Published – January 21, 2025 03:41 pm IST
