WHY I FEEL SORRY FOR INDIAN EXPERTS EXPLORING POINTS TO JUSTIFY THAT TRUMP TARIFFS WON'T HURT INDIA. - By Dr. Zakir Hussain, Delhi-Based Analyst.

On April 2, 2025, U.S. President Donald J. Trump, the 47th U.S. president, declared his much-awaited reciprocal tariffs on its trading partners. However, as he claimed to be relatively “kind,” he announced “discounted” reciprocal tariffs in the range of 10% to 49%, including a 10% baseline tariff on all goods entering the U.S. from all 180 countries. The tariffs will be executed in two rounds. The baseline tariff will be executed in the first round on April 5, while the discounted reciprocal tariffs will be implemented in the second round on April 9.  Sixty-one countries will be charged the discounted tariff rate. To make it effective, President Trump also ordered that he will retaliate against any country that attempts to retaliate.

However, China has been hit the hardest. Total tariffs on China will be around 54%—a fresh 34% tariff along with the 20% Trump declared when he took the oath. Trump has not spared enemies or friendly countries. He emphasized that friendly countries are economically more dangerous than enemies, fleecing the U.S. in good faith while imposing high tariffs on U.S. products.  He nicknamed them the “Dirty 15,” which includes Argentina, Australia, Brazil, Canada, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Russia, Saudi Arabia, South Africa, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom, and Vietnam.

The basic objective of reciprocal tariffs, as underlined by President Trump, is to reduce the trade deficit.  Currently, the U.S. suffers a trade deficit of USD 1.2 trillion, of which approximately USD 800 billion is a merchandise deficit. The U.S. has the highest trade deficit with China, approximately USD 295 billion, followed by the EU (USD 232 billion), Mexico (USD 172 billion), Vietnam (USD 123 billion), Taiwan (USD 74 billion), Japan (USD 69 billion), South Korea (USD 66 billion), Canada (USD 63 billion), and India (USD 46 billion). However, India's current trade surplus with the U.S. has been estimated at USD 36 billion. This is due to preemptive measures India has taken in its budget and subsequently, such as abolishing the 6% online advertisement tax charged to U.S. companies, including Google, Meta, and Amazon.    

What about India? Indian experts are shocked and dismayed. They have failed even to understand how and why a 26% tariff has been imposed and why Trump disowned Prime Minister Modi's friendship; however, they are feeling somewhat comfortable with the 26% tariff. They are rejoicing that our tariff rate is lower than that of our economic rivals, such as Vietnam (46%), Bangladesh (37%), Cambodia (49%), and Thailand (36%), as Trump imposed a higher tariff rate. Thus, the differential in tariff rates would give India leeway to out-compete these countries, which supply the same products as India does, in the US market. The tariff differentials with our rival countries are seen as an advantage for Indian exporters.

So far, so good.

However, we gather that Vietnam is perhaps ready to trade with the U.S. at zero tariff, while Cambodia is also mulling over reducing tariffs as low as 5% on U.S. products. We wouldn't be surprised if Bangladesh also adopts the same policy.

What would Indian experts do if most of our economic rivals started trading with the U.S. at zero tariffs, since these countries do not have large markets to absorb huge quantities of U.S. goods and hence won't be able to absorb much U.S. product? The compliance of these countries would largely serve U.S. interests by supplying cheap products and helping stabilize U.S. market prices. The U.S. would likely encourage these countries to continue their supplies and help tone down rising inflation, while Trump would obviously keep pressure on India to open its market for U.S. products and absorb imported economic losses.

Since these countries, Vietnam and Cambodia, etc., are rerouting Chinese products to the U.S. market, Beijing would likely encourage them to trade with the U.S., even at zero tariff. Although this would reduce China’s benefits, it would at least sustain Chinese industries, maintain employment, and sustain a relatively reasonable rate of economic growth. However, this would hurt China, as it would not effectively impact the U.S. to come to the negotiating table. Nevertheless, it would give China space to diversify its trade partners. In such a condition, Beijing would likely approach India as well. In fact, China has already shown interest in working with India to minimize the effects of Trump's tariffs.

I am sorry to read the op-eds by our experts exploring points to justify that Trump tariffs will not impact India much.

Find The Source Below: White House.