President Donald Trump has announced the implementation of reciprocal tariffs on India starting April 2, a move that signals potential challenges ahead in the ongoing Free Trade Agreement (FTA) negotiations between the two nations. These new tariffs could create friction and complicate discussions surrounding the agreement.
Despite this development, New Delhi remains optimistic that the understanding reached between Prime Minister Narendra Modi and President Trump during their meeting on February 13 will help address existing trade concerns and ensure that the first phase of the FTA is finalized by the targeted September deadline.
Commerce and Industry Minister Piyush Goyal embarked on his visit to the United States on Monday, where he is scheduled to meet with the newly appointed United States Trade Representative (USTR), Jamieson Greer, to discuss pressing trade matters.
In his first address to a joint session of Congress after beginning his second term, President Trump strongly defended his administration’s firm stance on tariffs. He argued that the United States had long been subjected to disproportionately high tariffs from various countries, including India, and emphasized the need for a fairer trade system. Trump declared that, starting April 2, his administration would enforce reciprocal tariffs on multiple nations.
“The European Union, China, Brazil, India, Mexico, and Canada—have you heard of them?—and many others impose significantly higher tariffs on us than we impose on them. It’s completely unfair,” Trump remarked during his address.
Previously, Trump had referred to India as the “tariff king,” particularly criticizing its auto sector for imposing import duties exceeding 100 percent. He reiterated his position, stating, “India imposes a 100 percent tariff on our goods; this system has never been fair to the United States.”
Trump further elaborated on his administration’s plan, stating, “Starting April 2, reciprocal tariffs will come into effect. Whatever tariff they impose on us, we will impose the same on them. If they use non-monetary trade barriers to restrict our access to their markets, we will do the same to limit their access to ours.”
Following the announcement of the reciprocal tariffs, the White House released a factsheet highlighting India’s high tariff rates. According to the report, the U.S. imposes an average Most Favored Nation (MFN) tariff of just 5% on agricultural goods, whereas India’s MFN tariff on similar products averages 39%. Additionally, India levies a 100% tariff on U.S. motorcycles, while the U.S. only charges a 2.4% tariff on Indian motorcycles.
Despite these tensions, Indian officials remain hopeful that trade disagreements can be resolved through diplomatic discussions. A source close to the matter emphasized that India-U.S. relations are “multifaceted” and that both countries are committed to finding mutually beneficial solutions. “We have a roadmap that ensures any disputes are addressed through consultations,” the source stated.
India has already undertaken several measures to facilitate greater market access for U.S. agricultural products such as alfalfa hay, duck meat, and medical devices. Furthermore, New Delhi has reduced tariffs on key U.S. exports, including bourbon whiskey, motorcycles, information and communication technology (ICT) products, and metals.
“The trade strategy we have formulated aligns with the $500 billion trade target set for 2030. It includes multiple elements that have been mutually agreed upon by the leadership of both nations. This framework not only promotes U.S. industrial exports to India but also expands the export of labor-intensive Indian products to the U.S.,” the source added.
However, experts have pointed out that the U.S. reciprocal tariff policy disregards certain World Trade Organization (WTO) agreements, such as preferential trade arrangements. This approach places emerging economies like India in a difficult position, as they must navigate both U.S. trade demands and global trade regulations simultaneously.
