New Delhi [India], April 6 : The imposition of high reciprocal tariffs by the US on other competing nations raises the possibility of increased dumping by those nations in India, as well as in other export markets, which could negatively impact certain sectors, CareEdge Ratings said in a report.
According to the report ' Sectoral Impact of US Reciprocal Tariff: Neutral to Negative, ' the expected direct impact of US reciprocal tariffs would vary, with no impact expected on pharmaceuticals since they are exempt from reciprocal tariffs for now.
According to the rating agency, the impact is expected to be largely neutral for electronics, textiles, agricultural products, chemicals, and automobiles and parts. At the same time, it would be negative for gems and jewellery.
During 2023-24, India's aggregate merchandise exports to the US stood at USD 77.5 billion compared to its imports from the US at USD 42.2 billion.
Out of India's total exports to the US, the sectors in descending order of value are electronics, textiles, pharmaceuticals, gems and jewellery, agricultural products, chemicals and automobiles and parts.
Until now, the US has been charging an average tariff of 3.50 per cent on imports of goods from India with respect to the above-said sectors, which is now being increased uniformly to 26 per cent in the form of a reciprocal tariff.
Reciprocal tariff imposed by the US on other nations who are India's major competitors in most of the above sectors is higher than us - Vietnam at 46 per cent, Bangladesh at 37 per cent, China at 34 per cent, Taiwan at 32 per cent, Indonesia at 32 per cent and Pakistan at 29 per cent, which, according to rating agency, augurs well for key export sectors of India.
Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.
On April 2, the US President issued an executive order on reciprocal tariffs, imposing additional ad valorem duties ranging from 10 per cent to 50 per cent on imports from all trading partners. The baseline duty of 10 per cent will be effective from April 05, 2025, and the remaining country-specific additional ad valorem duty will be effective from April 09, 2025. The additional duty on India is 26 per cent.
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