Reciprocal tariffs: Time for a rethink on trade

In disruption lies opportunity. A US trade policy of mirror tariffs could serve our interests in several export sectors. India should forge a strategy that places trade logic above tactics

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President Donald Trump of the US is tearing apart the multilateral trading system with his self-confessed love of tariffs, which he seems to imagine would yield huge extra revenues extracted from trade partners. In a press conference after his talks with India's Prime Minister Narendra Modi, he promised to levy reciprocal tariffs. Whatever duties India levies on imports from the US of specific items (or classes of goods), the US would levy on imports from India. This would not be a big disaster for our US-bound shipments. According to former trade service official Ajay Srivastava, on 75% of the goods we export to the US, we levy an average tariff of 5% when the same are imported. On many labor-intensive goods like garments, textiles and leather, the US imposes tariffs ranging from 15% to 30%. If reciprocal tariffs are levied, India stands to benefit from lower US levies on many items whose exports matter to our economy, especially small and medium enterprises that employ more people than capital, relatively speaking, to create the same value. So o