Trump’s Reciprocal Tariffs To Apply From April 2, How Is India Preparing To Quell Incoming Trade Onslaught?

Asian nations, including India, are facing difficult choices and uncertainty as US President Donald Trump has confirmed that his plan for "reciprocal tariffs" will apply to "all countries."

This has dismissed speculation that he might initially limit the scope of the tariffs, which are set to be introduced on April 2.

The proposed tariffs present a major challenge for a region whose economies have long been reliant on exports to the United States and a global system of low trade barriers.

"You'd start with all countries, so let's see what happens," Trump told reporters aboard Air Force One.

"I haven't heard a rumour about 15 countries, 10 or 15."

The US president is preparing to impose "reciprocal tariffs" from April 2 as part of his strategy to rebalance global trade, promote American manufacturing, and generate revenue to support his domestic policies.

These include extending tax cuts from his first administration and fulfilling additional tax-related pledges from his 2024 campaign.

The White House has yet to specify which tariffs will be introduced, how they will be calculated, or what conditions countries must meet to secure exemptions.

Trump has also suggested that non-tariff barriers will be taken into account but has not clarified how this will be assessed. Additionally, no official timeline has been provided for when these tariffs will come into effect.

"We're going to be much nicer than they were to us, but it's substantial money for the country," Trump stated.

What exactly is Donald Trump planning?

According to Reuters, Trump intends to announce import duties, including "reciprocal" tariffs that would match the rates imposed by other countries and account for various subsidies.

Trump has indicated that India, the European Union, South Korea, and Brazil are among the nations he is considering targeting with these tariffs.

How is India responding to Trump's reciprocal tariff policy?

Unlike China, Canada, and the European Union, India is taking a more conciliatory approach towards the Trump administration. According to Reuters, India is open to reducing tariffs on over half of its $23 billion worth of imports from the US.

Negotiations and tariff reductions

India has reportedly proposed lowering tariffs on US agricultural products, including almonds and cranberries, as a goodwill gesture, Reuters reported, citing two government officials.

During discussions in New Delhi with Brendan Lynch, the Assistant US Trade Representative for South and Central Asia, India agreed to reduce tariffs on bourbon whiskey and agricultural imports such as almonds, walnuts, cranberries, pistachios, and lentils, the report added.

According to the Hindustan Times, India and the US recently concluded their first in-person trade negotiations with "significantly positive outcomes." These developments may help India secure exemptions from the retaliatory tariffs that Washington plans to introduce on 2 April.

The four-day discussions, which began on Wednesday and were extended by a day, led to a general agreement on the framework for negotiating a Bilateral Trade Agreement (BTA). India's Commerce Ministry confirmed that both nations discussed improving market access and reducing tariff and non-tariff barriers.

Officials involved in the negotiations highlighted several positive takeaways from the talks.

"Firstly, the bilateral trade negotiation in New Delhi was extended by one more day. Secondly, the two now agreed to enter into the next level of talks through virtual mode. Thirdly, India is the only country engaging with the USA to sign a mutually beneficial BTA, while others like China, Canada, Mexico, Germany, and the European Union are resorting to retaliation. And finally, President Trump's positive reference with regard to India," one official, speaking on condition of anonymity, told the media.

This was in reference to Trump's statement at the White House on Friday, where he described Prime Minister Narendra Modi as a "very smart man" and his "great friend," while expressing confidence that the trade discussions between the US and India would be resolved positively, according to PTI.

The negotiations were conducted in what officials described as a "friendly and cordial atmosphere with shared purpose," with an aim to reach an agreement by September this year, in line with the vision outlined by the leaders of both nations.

Policy changes

In a move to align itself with US trade expectations, India has eliminated the 6% "Google tax" on online advertisements. This tax had previously posed a challenge for global technology firms operating in India without a physical presence. The removal of this levy is seen as a step towards facilitating smoother trade discussions and potentially avoiding US tariffs, Financial Times reported.

Modi's US visit

On February 13, Prime Minister Narendra Modi and President Donald Trump reaffirmed their commitment to strengthening US-India trade ties in a manner that promotes economic growth, national security, and job creation. Their objective is to expand total bilateral trade from approximately $200 billion to $500 billion by 2030, under the initiative known as Mission 500.