Mixed bag for India as Trump unleashes tariff war

27% US LEVY ON INDIAN GOODS THREATENS BIGGEST EXPORT MARKET. COULD DENT DOMESTIC GDP GROWTH BY 30-50 BASIS POINTS IN FY26.GOVT MAY CONSIDER EXTENDING SUPPORT TO AFFECTED SECTORS

- ASIT RANJAN MISHRA & SHREYA NANDI

U.S. President Donald Trump on Thursday unveiled his promise of reciprocal tariffs on trading partners, stressing this was a kinder reciprocity as it amounted to only half of the levies U.S. goods faced. This included a 27 per cent additional tariff imposed on imports from India as part of his country-specific tariff structure that will kick in from April 9.

The move that includes a baseline 10 per cent tariff on all countries, which takes effect on April 5, is feared to trigger an escalating trade war with likely tectonic shifts in the global economic landscape.

While crucial exporting sectors for India, such as pharmaceuticals and energy, were kept out of the ambit of reciprocal tariffs, the relatively low duty imposed on India compared to its competitors such as China (34 per cent), Vietnam (46 per cent), and Bangladesh (37 per cent) may give New Delhi a competitive advantage.

Trump's tariffs, however, are also feared to spark global supply glut and a U.S. economic contraction through a domestic consumption shock that could have adverse impact on India. "They (India) are charging us 52 per cent and we charge almost nothing for years and years and decades," Trump said at the "Liberation Day" event at the White House Rose Garden. He also indicated that the U.S. was open to lowering these tariffs if other nations removed their trade barriers on U.S. exports, and implored foreign leaders to "terminate your own tariffs, drop your barriers" and "don't manipulate your currencies."