Winning Bizness Desk
Mumbai.India is considering reducing tariffs on some high-end imported goods from the US, including steel, luxury motorcycles, and electronics. According to reports, Finance Minister Nirmala Sitharaman may announce this in the Union Budget on February 1.
Currently, India imposes over 100% tariffs on at least 20 imported items from the US. This move comes after former US President Donald Trump threatened to impose higher tariffs on India, China, and Brazil during a campaign event in Florida.
US-India Trade Relations
The US is one of India's biggest trading partners, with bilateral trade exceeding $118 billion in 2023-24. India maintains a trade surplus of $41 billion with the US, meaning India exports more to the US than it imports.
Trump’s ‘America First’ Tariff Threat
During his campaign speech, Trump said:
"We will impose tariffs on countries and foreign entities that harm us. Look at what other countries do—China imposes massive tariffs, and so do India, Brazil, and others. We will not allow this anymore because we will always put America first."
What Are Tariffs, and Why Are They Important?
Tariffs are taxes imposed on imported goods. Countries use them to regulate trade by making foreign products more expensive compared to locally produced goods. To ensure tariffs do not exceed a certain limit, countries negotiate with the World Trade Organization (WTO) to set a ‘bound rate’, which acts as a cap on import taxes.
Trump’s 100% Tariff Threat Against BRICS Countries
Trump has also threatened to impose 100% tariffs on BRICS nations (Brazil, Russia, India, China, and South Africa). His demand is that these countries do not create an alternative currency for global trade or trade in non-US currencies. If BRICS nations continue to explore non-dollar trade, Trump has warned they will face 100% tariffs on their exports to the US.
Impact on Indian Exports
India conducts over 17% of its total foreign trade with the US, making it a crucial partner. The US is also the largest buyer of Indian agricultural products, including fruits, vegetables, and rice. In 2024 alone, the US imported 18 million tons of rice from India. If Trump imposes 100% tariffs, Indian products in US markets will become twice as expensive, leading to a drop in demand from American consumers.
To counter possible US tariff hikes and maintain smooth trade relations, India is likely to lower import duties on select American goods. The final decision is expected to be announced during the Union Budget presentation on February 1.
