During a speech President Donald Trump addressed India China and Brazil as “tremendous tariff-makers” while warning he will enhance import tariffs coming from these countries. Trump declared that his government will place America in the first priority position. An increase in tariffs will reduce the competitive value of Indian exports to the US market.
The United States government might raise duties on Indian export products like pharmaceuticals with textile items. During its first term in 2018 the Trump administration implemented enhanced steel and aluminium tariffs that resulted in Indian trade retaliation alongside other nations.
India conducts the majority of its merchandise trading activities with China and the United States. The government of India plans to find a peaceful resolution to the trade disputes with the United States during the upcoming meeting between Prime Minister Narendra Modi and Donald Trump in February at the White House.
What size does Indian exports and imports enter into the US market?
Merchandise exports from India to the USA represent its biggest destination since they make up more than 18% of total exported value. Indian product exports to the U.S. during 2023-24 exceeded total exports to the three countries ranking after the US combined. That trend continues in 2024-25.
World’s biggest economy receives about 6% of its imports while India sends more than 18% of its exports to this trading partner. Throughout the last year India’s imports from the US declined by 17% to total $42.2 billion. The statistical gap between India’s imports and exports has driven up the US trade deficit with India which prompted Trump to consider trade tariffs.
What constitutes the trade basket?
One third of India consumes petroleum crude and products from the United States based imports. Precious and semi-precious stones and imitation jewelry pieces constitute the second greatest import category after petroleum crude and its products.
Key purchases from India consist of power plant equipment with its major components including nuclear reactors and boilers along with electrical machinery and equipment and aircraft with parts and medical equipment. Through military equipment purchases the United States serves as a strategic alternative for India in its pursuit to move away from Russian military supplies.
Production exports from India to the US market consist of petroleum products along with drug formulations and pearls and precious/semi-precious stones and telecom instruments followed by electrical machinery with apparel and cotton fabrics and electronic components. India’s exports to the US rose rapidly after the Covid disruptions of 2020.
Trump seeks what specific benefits from India
Trump seeks both lower Indian tariffs for American products while demanding greater Indian purchases of American materials. Trump discussed during his phone conversation with Modi about India increasing security equipment purchases from America while working towards joint trading agreements free from unfair practices.
The Harley-Davidson motorcycle tariffs India imposed several times drew Trump’s attention to pursue lowered trade restrictions. The Indian government implemented a reduction of motorcycle duties by half through its 2019 policy while manufacturing Harley-Davidson products takes place in this market.
According to Global Trade Research Initiative co-founder Ajay Srivastava Trump chooses to focus on the most extreme tariffs when he insists on others decreasing their tariffs.
Most imported goods pay 3.3% tariff in the US and India has a 17% average duty that reaches 150% for whiskey and wine and 125% for cars. As a member of the World Trade Organization India fulfills its WTO obligations even with its existing duty rates.
The commitments entered by nations with the WTO prevent Trump from requesting lower tariffs according to a diplomatic official speaking to The Hindustan Times.
Does India plan to decrease its current tariff levels?
India levies equal duty rates on American imports that it applies to every non-FTArelevant nation. Indian authorities would have considered lowering American product tariffs through a Free Trade Agreement (FTA) between the two nations.
Through the Indo-Pacific Economic Framework for Prosperity (IPEF) India had the potential to work toward gaining preferential treatment terms for goods importation from member countries. IPEF omits rates and quantities of tariffs protection between member nations.
There exists no possibility to offer special concessions to any particular country through budgetary announcements. The US will not receive any benefits from generic tariff reductions made through the budget system since China and Vietnam would gain more economic advantages.
Is America willing to increase its export volume to India for achieving trade equilibrium?
Main trading activities between private entities depend on commercial terms which drive their business decisions. The United States seeks greater weapon sales to India although the opportunity may come to fruition since India seeks alternative Russian military arms suppliers.
Indian customers acquire petroleum crude and its products as their leading imports from the United States. Petroleum crude purchase increases in India whenever American oil firms present better agreements than alternative suppliers including Russia and UAE to the Indian market.
Srivastava advocated moving past the current trade imbalance by assessing the complete economic connection between both nations.
The Indian market serves as a vital ground for both traditional American business organizations and firms like Microsoft and Alphabet as well as social media platforms alongside electronic commerce companies Amazon and Walmart.
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