Trade tensions between India and the United States have escalated in recent months following aggressive tariff moves by the US under President Donald Trump. In response, India has introduced a series of reciprocal tariffs on a range of US goods. But what exactly are these tariffs, why were they imposed, and how do they affect India’s economy?
This blog explores; what are the tariffs imposed by India on the US, the concept of reciprocal tariffs, and their impact on various sectors and India’s export-driven economy.
Explore: How does the US Tariff Affect the Indian Stock Market?
What is Reciprocal Tariffs?
Reciprocal tariffs refer to import duties that a country imposes in direct response to tariffs placed on its exports. It’s a tit-for-tat trade strategy used to counter unfair trade practices and protect domestic industries.
For example, if the US imposes a 20% tariff on Indian steel, India may respond with a 20% or similar tariff on key American imports like almonds or Harley-Davidson motorcycles.
Reasons for Reciprocal Tariffs
India’s decision to impose reciprocal tariffs wasn’t made in isolation. Several factors influenced this move:
1. Trade Imbalance:
The US has long pushed India to lower its trade surplus with America. Tariffs help correct imbalances in the short term.
2. Protection for Domestic Industry:
Higher duties protect local manufacturers from an influx of cheaper US goods.
3. Retaliation for US Tariffs:
The US recently imposed a 26% duty on several Indian export categories, triggering a direct response.
4. Retaliation for US Tariffs:
The US recently imposed a 26% duty on several Indian export categories, triggering a direct response.
5. Political Messaging:
Strong reciprocal action signals India’s intent to stand firm in global trade negotiations.
Reciprocal Tariffs Imposed by India
| US Exported Product | Tariff Imposed by India |
|---|---|
| Almonds | 20% |
| Apples | 25% |
| Walnuts | 20% |
| Pulses | 30% |
| Motorcycles (engine capacity >800cc) | 40% |
| Medical devices | 15% |
| Steel and Aluminum products | 10%–20% |
Reciprocal Tariffs Impact on India
1. Short-term Price Hikes:
Indian consumers may face higher prices for imported goods like almonds and apples.
2. Boost to Local Alternatives:
Domestic producers benefit as local demand shifts away from high-cost imports.
3. Trade Diversification:
India may look to strengthen trade with countries like Australia and the EU to reduce reliance on US markets.
4. Investor Uncertainty:
Global Investors may remain cautious due to policy unpredictability.
Impact of Reciprocal Tariffs on Various Sectors
| Sector | Impact Level | Description |
| Agriculture | High | Tariffs on almonds, apples, and walnuts raise input costs and prices |
| Auto & Motorcycles | Moderate | Tariffs on premium US motorcycles like Harley-Davidson reduce demand |
| Steel & Aluminum | Moderate | Import restrictions lead to cost volatility for industrial use |
| Healthcare | Low to Moderate | Higher tariffs on medical devices impact hospitals and diagnostic labs |
| Consumer Goods | Low | Slight price rise on luxury imports, limited impact on mass consumption |
Overall Impact on India’s Export Trade
Though the tariffs target US imports, the retaliatory climate affects India’s broader trade ecosystem:
1. Export Slowdown:
US buyers may reduce Indian orders due to trade uncertainty.
2. Current Volatility:
Ongoing tensions can lead to rupee depreciation, impacting cost structures.
3. Shift to Bilateral Agreements:
India may push for trade deals with non-US partners
4. Domestic Industry Advantages:
Some export sectors may benefit from import substitution policies.
Explore: How to Invest Money in a Falling Market in India?
Final Thoughts
Understanding what are the tariffs imposed by India on the US reveals more than just number, it highlights India’s evolving position in global trade politics. Reciprocal tariffs are a calculated move to defend national interests but comes with strategic trade-offs. As global supply chains evolve, India’s next moves will be closely watched by markets and policymakers alike. For businesses and investors, staying informed is no longer optional, it’s essential.
