The tariff war and reciprocal tariff demands are gaining traction as US President Donald Trump announced that the US will introduce reciprocal tariffs from April 2. In the latest development on the zero tariff demands from US, CNBC-TV18 reported that US may demand zero tariffs on all products traded between the two countries apart from agriculture goods.
Though the final contours of the exact tariff levy is yet to be announced, these are source based information, reported by CNBC-TV18 and not verified by FinancialExpress.com. Trump has repeatedly highlighted the high tariffs levied by India and the matter was discussed during Prime Minister Narendra Modi’s US trip as well.
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Meanwhile several reports have indicated that the impact of the reciprocal tariff will be significantly lower for India, given the country’s miniscule share in global trade. The difference of tariff imposed by US on India and what India imposes on US also needs to be taken into account. In case of India, the weighted tariff differential is 6.5% with much higher differential in case of food products, footwear, garments, vehicles and consumer goods.
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A report by ICICI Securities point out that, “But most importantly, “higher tariffs will have the largest impact on US consumers given US goods imports of $3.3 trillion (11.2% of GDP). India’s elasticity of exports to US consumption is 1.5 implying a 5% tariff would have a $6-7 billion impact all else being equal. If tariffs are increased more on other countries than India, it would actually benefit the country in gaining share in US market.”
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