Dealing with US tariffs

RESIDENT DONALD TRUMP signed an executive order earlier this month, imposing an additional 25% tariff on India for its imports from Russia, thereby raising the total tariff level to 50%.

- PRABIR DE

This World Trade Organization (WTO)-inconsistent tariff, whose implementation was notified by the Trump administration on Tuesday, is going to heavily affect India's $48.2-billion merchandise exports to the US. The merchandise exports account for almost 60% of India's export to the US. The US has already raised the tariffs for all other trade partners with a variation between 10% to 50%.

There is no doubt that the higher tariffs imposed by the US on its trade partners could negatively impact the world economy. In particular, the US's 50% tariff on India may cause downside risks to the country's growth. Such a high tariff may also pose risks to India's aspiration to become a developed nation by 2047. The journey to Viksit Bharat may face more bumpy roads. Triggered by the US, WTO members have started raising trade protection. Though a full-blown tariff war is not in sight, damages to the world economy due to the rising trade protections is no less in volume. India's labour-intensive exports such as gems and jewellery, garments, leather and footwear, seafood, etc. will lose the US market to less expensive exporters such as China and Vietnam.