April is the cruellest month, India is set to find out the hard way a century after T.S. Eliot’s proclamation as his countryman wields the tariff sledgehammer.
US President Donald Trump took the lectern on Tuesday to announce reciprocal tariffs from April 2 on countries such as India before terming the steep duties these countries levy on American products “very unfair”.
The declaration of like-for-like tariffs has come at a time when commerce minister Piyush Goyal is camping in the US to navigate trade tensions between the two countries.
While addressing a joint session of the US Congress on Tuesday, Trump singled out the auto sector wherein India charges tariffs of over 100 per cent.
“India charges us 100 per cent tariffs, the system is not fair to the US, it never was. On April 2, reciprocal tariffs kick in. Whatever they tax us, we will tax them. If they use non-monetary tariffs to keep us out of their market, then we will use non-monetary barriers to keep them out of our market,” said the US President, stirring up anxiety in export sectors such as agriculture and automobiles.
In doing so, Trump stuck to what he had told Prime Minister Narendra Modi during his visit to the US last month. The US President had told his “friend” that India would not be spared from Washington’s reciprocal tariffs and emphasised that “nobody can argue with me” on tariff structure.
Early assessments on the likely impact of reciprocal tariffs, done by Citi Research, suggest potential losses of about $7 billion a year for Indian companies in sectors such as chemicals, metal products, jewellery, pharmaceuticals and food products.
In anticipation of these harsh economic measures, which Trump had indicated while campaigning for the US elections, New Delhi began discussions on a trade deal with the US during Modi’s visit to America last month. As both nations agreed to work on the first segment of a trade deal by the fall of 2025, aiming for bilateral trade worth $500 billion by 2030, Goyal left for the US earlier this week to meet the new trade representative, Jamieson Greer, who has been tasked with implementing Trump’s tariff plan.
The fact that trade deal negotiations might not be enough to garner concessions for India on sweeping reciprocal tariffs was clear in Trump’s first address to the joint session of the Congress in his second term in the White House.
“If you don’t make your product in America, however, under the Trump administration, you will pay a tariff and in some cases, a rather large one,” Trump said.
“Other countries have used tariffs against us for decades, and now it’s our turn to start using them against those other countries. On average, the European Union, China, Brazil, India, Mexico and Canada — have you heard of them? And countless other nations charge us tremendously higher tariffs than we charge them,” the US President said.
The target countries, such as Canada, Mexico and China, already face US tariffs and the Trump administration has now imposed universal tariffs on steel and aluminium. India has so far escaped becoming Trump’s tariff target, but the situation will change on April 2 when the reciprocal tariffs on all other countries, including India, kick in.
Countries such as India have among the widest tariff differentials — measured in terms of the difference in the average rate of tariff that India levies on imports from the US and what the US charges on imports from India. Analysts believe that the risk of retaliatory tariffs is high for India, which also enjoys a trade surplus of almost $100 billion with the US.
According to a Reuters report, Goyal is likely to seek clarity on the reciprocal tariffs to assess their impact on India and may also discuss potential Indian concessions and a trade deal to reduce tariffs and boost bilateral trade.
India has already cut tariffs on several items. Tariffs on high-end bikes have been cut to 30 per cent from 50 per cent. The duty on bourbon whiskey has been slashed to 100 per cent from 150 per cent. India has promised to review other tariffs, step up energy imports and buy more defence equipment. New Delhi is open to discuss tariff cuts on industrial products, including automobiles and chemicals, but is resisting pressure to lower tariffs on agricultural items because of its likely impact on domestic politics.