US slaps 26% tariff on India amid ongoing bilateral trade talks
The United States has imposed a 26% reciprocal tariff on Indian goods as part of sweeping trade measures announced by President Donald Trump during his “Liberation Day” address on April 2, 2025. This tariff, described as “discounted,” is half of the 52% tariffs that the US claims India imposes on American products, including alleged currency manipulation and trade barriers.
Scope and Implementation: The new tariff applies to all Indian goods entering the US, with a baseline 10% tariff on all imports effective April 5, and the remaining 16% added from April 10.
Rationale: Trump justified the tariffs as a response to what he described as decades of unfair trade practices by foreign nations, including India. He cited India’s high tariffs on American products, such as a 70% duty on motorcycles and automobiles, compared to the US’s much lower rates.
Impact on India: Key sectors such as pharmaceuticals, IT services, and automobiles are expected to be heavily affected. Indian businesses are scrambling to assess the economic impact, while the government has stated that it does not view this as a setback but is analyzing potential responses.
Context of Bilateral Trade Talks:
India and the US have been negotiating a bilateral trade agreement aimed at increasing market access and reducing trade barriers. Both nations had set a goal of doubling bilateral trade to $500 billion by 2030. Despite these ongoing talks, Trump’s tariff announcement underscores tensions over existing trade imbalances—the US had a $46 billion trade deficit with India in 2024.
Global Reaction and Broader Implications:
The tariff announcement is part of broader measures targeting multiple countries, including China (34%), Japan (24%), and the European Union (20%). These actions have sparked concerns about escalating global trade wars, with Asian markets already reacting negatively.
India’s official response is expected later today, but with Prime Minister Narendra Modi attending a summit in Thailand, substantive discussions may be delayed.
