A careful study of the Tariff fact sheet issued by US White House indicates that “some goods will not be subject to the Reciprocal Tariff.” However, most market observers believe that though there could be some temporary relief, one needs to look at the exemptions carefully. There are chances that they might be clubbed separately and chances of a new tariff on them are quite strong.
These 6 sectors exempted from 26% tariff
Most of the sectors exempted so far are critical to the US economy. These include:
- articles subject to 50 USC 1702
- steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs
- copper, pharmaceuticals, semiconductors, and lumber articles
- all articles that may become subject to future Section 232 tariffs
- bullion
- energy and other certain minerals that are not available in the United States.
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Though the Trump administration has not focussed on them in the current announcement, Saurav Ghosh, Co-founder, Jiraaf (Bond investment platform) highlighted that, “Exemption of reciprocal tariff on goods under section 232 like pharma, semiconductor, copper, gold and lumber are to be taken with caution. They are being examined more closely and are set to be covered under national security tariffs. Given these goods are critical or sensitive for the US, it would merit a category by category discussion instead of a wide brush approach.”
Manish Goel, Founder and MD, Equentis Wealth Advisory Services too reiterated the need to be seen with caution, “The exemption of key Indian exports such as pharmaceuticals, semiconductors, and certain minerals from reciprocal tariffs under Section 232 is a relief. However, these exemptions should be viewed with caution.”
Policy shift a key risk
The White House statement clearly states the additional powers that Trump has to change or levy fresh tariff. “Today’s IEEPA Order also contains modification authority, allowing President Trump to increase the tariff if trading partners retaliate or decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.”
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Manish Goel highlighted the need to exercise caution,
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