A Geoeconomic Tool

S RECIPROCAL TARIFFS are kicking in from August 7. India is one of those few countries which are yet to reach a deal with the U.S. Most of its exports to the U.S. will attract 25% tariffs from August 7.

- AMITENDU PALIT

Does this mean India's export prospects to the U.S. will be worse affected than those who have been able to "deal" with the U.S?

It is not possible to conclude if Indian exports to the U.S. are better or worse off. The U.S.'s use of tariffs as a geoeconomic power tool has led to different countries paying different prices for accepting its demands. Relatively lower reciprocal tariffs don't mean these prices have been less.

Going by the list of country-specific reciprocal tariffs announced by the White House in its executive order of July 31, several countries have reciprocal tariffs lower than what were announced on April 2. These are countries that have worked out deals with the U.S. Bangladesh, for example, now has reciprocal tariffs of 20%, much lower than 37% earlier. For Indonesia too, tariffs have come down from 32% to 19%; and for Vietnam from 46% to 20%. India's reciprocal tariffs have marginally changed from 26% to 25%.

The current debate on relative prospects for exports of various countries to the U.S. is based on the variations in reciprocal. It is important to note that reciprocal tariffs are not the only tariffs announced by the U.S. There are also Section 232 sectoral tariffs that have been variously announced on steel, aluminum, automobiles, and auto parts. There are also transshipment tariffs of 40% that will be levied by the U.S. customs on exports from any country if they are suspected to have been routed in a way that aims to avoid reciprocal tariffs for the specific country.