Reciprocal tariff on India: What’s the actual US tariff on India - 26% or 27%?

The United States has reportedly revised its tariff on Indian exports to 27%, a 1% increase from the 26% initially announced by US President Donald Trump. This adjustment is part of a broader strategy to implement reciprocal tariffs on imports from 14 countries and two island nations, as outlined in an executive order signed by Trump. 

A review of published data conducted by Bloomberg found discrepancies in the future reciprocal tariff rates listed in a White House annex compared to the charts presented during President Donald Trump's announcement of the "Liberation Day" tariffs in the Rose Garden. At least 14 economies were affected by these discrepancies.

The revised rate for India was highlighted in annexures attached to the executive order, revealing disparities from the figures presented at a recent announcement event. 

Apart from India, countries including South Korea, Pakistan, and the Philippines also face revised tariffs compared to those initially indicated by Trump.

The executive order also highlights tariff differences for countries such as Botswana, Norway, and Thailand, among others, with varying figures between the executive order and the chart shown by Trump. 

These changes are part of a 10% base tariff rate set to take effect from April 5, followed by increased rates applicable to specific economies four days later. Such adjustments are intended to address trade imbalances between the US and its trading partners. The White House said in a statement that the goal is to balance bilateral trade deficits, which are assumed to be influenced by both tariff and non-tariff factors. 

Calculation of reciprocal tariffs

The US approach to reciprocal tariffs is based on the calculation necessary to achieve zero bilateral trade deficits with each partner. These tariffs range from 0% to 99%, with average rates of 20% and 41% unweighted and import-weighted, respectively. As per a Bloomberg report, the US has experienced persistent current account deficits over the past five decades, challenging traditional trade models that expect self-balancing trade over time.

In terms of specific goods, the US levies a 2.5% tariff on passenger vehicle imports, while India imposes 70%. Additionally, US apples enter India with a 50% duty, whereas they enter the US duty-free. On networking equipment, India applies tariffs ranging from 10% to 20%, whereas the US imposes no tariffs. "The statement added" that these discrepancies are part of the broader trade deficit framework, where the US currently has a $46 billion trade deficit with India. 

In an effort to tackle trade imbalances, President Trump implemented tariffs as part of his administration's strategy. He has emphasized the need to address the high import duties placed by India on American goods, with the goal of reducing the trade deficit and promoting domestic manufacturing.

During a recent announcement at the White House, President Trump referred to Prime Minister Narendra Modi as a "great friend" while also expressing dissatisfaction with India's trade practices. Despite praising Modi, Trump noted that there are concerns about India not treating the US fairly in trade relations.

“India, very, very tough. Very, very tough. The Prime Minister just left. He’s a great friend of mine, but I said, ‘You’re a friend of mine, but you’re not treating us right. They charge us 52%. You have to understand, we charge them almost nothing for years and years and decades, and it was only seven years ago, when I came in, that we started with China," the US President said.