Trump tariffs to come into effect today: How will India be impacted?

The US is set to implement the new trade policy on April 2 based on reciprocity as announced by President Donald Trump. The White House has confirmed that President Donald Trump will impose new tariffs, with an announcement scheduled for Wednesday. However, details on the size and scope of these trade barriers remain undisclosed. The move has sparked concerns among businesses, consumers, and investors about a potential escalation in the global trade war.

For weeks, Trump has referred to April 2 as 'Liberation Day,' promising significant new duties that could disrupt the global trade system. A formal announcement is set to take place in the White House Rose Garden at 4 pm Eastern Time (2000 GMT).

White House spokeswoman Karoline Leavitt stated that reciprocal tariffs on countries imposing duties on US goods would become effective immediately following Trump's announcement. Additionally, a 25% tariff on auto imports is expected to commence on April 3.

Treasury Secretary Scott Bessent informed Republican House lawmakers that the reciprocal tariffs to be announced by Trump would serve as a 'cap' representing the highest US tariff level that countries might face. These tariffs could be reduced if countries comply with the administration's demands, according to Republican Representative Kevin Hern from Oklahoma.

Trump has already implemented tariffs on aluminum and steel imports and increased duties on all goods from China. However, he has frequently threatened further tariffs, only to later cancel or delay them.

In response to the US tariffs, China, Japan, and South Korea have signalled intentions to coordinate their efforts to counterbalance the effects and facilitate regional trade. 

TRADE TARIFFS: IMPACT ON INDIA

A day before the Trump tariffs were to be implemented, a report by the Office of the US Trade Representative (USTR) highlighted several tariff and non-tariff barriers imposed by India on imports. The report reveals that India's average Most-Favoured-Nation (MFN) applied tariff rate was 17 per cent in 2023, the highest among major world economies, with 13.5 per cent for non-agricultural and 39 per cent for agricultural goods.

Congress MP Manish Tewari, in a post on X, asked, “The million Dollar question is that in 2 hours and 15 minutes will US Reciprocal Tariff’s hit India or not or would the allegedly agreed Terms of Reference ( TOR’s) pause them temporarily?”  

The USTR's comprehensive report, examining the trade policies of 59 countries, outlines significant concerns regarding India's high import duties on farm products. It also raises issues about non-tariff barriers, including restrictions on imports, foreign direct investment, and challenges within the insurance industry. Additionally, it mentions internet shutdowns in India as disruptive to US digital services. The findings coincide with ongoing negotiations between India and the US for a bilateral trade pact, expected to initially address tariff-related issues.