The United States has also imposed tit-for-tat tariffs on India-U.S. trade, which is posing challenges to major sectors such as auto parts, chemicals, shrimp, and steel. But the pharma sector is mostly untouched. Unlike some countries that threaten American imports, India intends to react in a balanced, strategic, and professional way, a government official said.
In spite of such tariffs, India can be favored over the competitors such as China, Bangladesh, and Vietnam. The Ministry of Commerce and the Prime Minister’s Office (PMO) is evaluating the total effect before officially commenting on it.
The India tariff is 27%, not the earlier reported 26%, as per ministry records. This is a chance. India now has a 54-79% lead over China and a huge advantage over Vietnam and Bangladesh in textile exports. These advantages come from the tariff actions taken by the U.S. administration.
India’s stock market also responded adversely. The BSE Sensex opened around 806 points down but managed to recover partially. It was trading at 200.6 points (0.26%) down from the previous close of 76,617.44 by mid-morning.
Reciprocal tariffs for the U.S. are determined by dividing a trade deficit that the U.S. has with a nation by imports from said nation. Half of the percent resulting from said division is taken by the U.S. should the percentage rate be greater than 10%. The U.S. Trade Representative (USTR) seeks bilateral trade balance zero. The aforementioned calculation is under the assumption that import elasticity would be -4 and price pass-through would equal 0.25.
India’s success in staving off such tariffs relies on continuing trade negotiations. India and the U.S. are committed to completing a Bilateral Trade Agreement (BTA) in the fall of 2025, looking to double trade levels from $200 billion to $500 billion over five years. With the quickened negotiations and intense bilateral effort, India finds no cause to immediately retaliate.
These tariffs significantly impact India-U.S. trade. As both nations work toward a resolution, India aims to strengthen its global trade position and keep its industries competitive. India-U.S. trade relations continue to evolve, and India is actively developing strategies to counter adverse effects and leverage emerging opportunities.
