India Weighs Major Tariff Cuts to Counter US Trade War Impact

India is considering reducing tariffs on over half of US imports worth $23 billion to counter potential export losses from new US tariffs taking effect on April 2. The US tariffs could impact 87% of Indian exports, valued at $66 billion. India may lower duties on 55% of US imports, currently taxed between 5% and 30%, with some reductions being significant or complete. Discussions are ongoing, with no final decision made. A US trade delegation is visiting India to negotiate a deal before the new tariffs are enforced. India’s tariff cuts depend on whether the US eases its own.

Proposed reductions include almonds, pistachios, oatmeal, and quinoa, but not meat, wheat, maize, or dairy. Automobile tariffs may be lowered gradually. The Indian government fears that higher US tariffs could hurt key sectors like pharmaceuticals and automobiles. US companies might turn to alternative suppliers, impacting Indian businesses. Trade Secretary Sunil Barthwal emphasized protecting national interests. US Commerce Secretary Howard Lutnick urged broader tariff reductions.

India Weighs Major Tariff Cuts to Counter US Trade War Impact

India is exploring the possibility of reducing tariffs on over half of US imports, totaling $23 billion, as part of ongoing trade discussions. According to government sources cited by Reuters, this move aims to minimize the negative effects of new tariffs that the US is set to introduce on April 2 under President Donald Trump’s global trade policy.

These upcoming US tariffs could impact nearly 87% of Indian exports to the United States, which are valued at approximately $66 billion. To mitigate these potential losses, India is considering cutting tariffs on about 55% of American imports, which currently have duties ranging from 5% to 30%. Some of these tariffs may see significant reductions, while others could be removed entirely.

The discussions are still in progress, and a final decision has not yet been reached. India is also evaluating whether to implement sector-specific tariff adjustments instead of making broad reductions across all industries.

A delegation from the US, led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is scheduled to visit India for trade talks beginning Tuesday. Both nations hope to reach an agreement before the new US tariffs take effect.

India’s Strategy and Conditions

During Prime Minister Narendra Modi’s visit to the United States in February, both countries agreed to start early trade negotiations to address tariff-related issues. However, India’s willingness to lower import duties will largely depend on whether the US reciprocates by easing its own tariffs.

The Indian government is open to reducing tariffs on specific products such as almonds, pistachios, oatmeal, and quinoa. However, it has set firm limits on the scope of these negotiations and will not cut duties on meat, wheat, maize, or dairy products. Additionally, while automobile tariffs, which currently exceed 100%, may be reduced, the government is considering a gradual approach rather than an immediate and significant drop.

Impact on Indian Businesses

A key concern for India is that higher US tariffs could negatively impact major export sectors, including pharmaceuticals, automobiles, and electrical equipment. If these tariffs make Indian exports less competitive, US businesses may start sourcing products from other countries such as Indonesia, Israel, or Vietnam. This could further hurt Indian businesses, leading to a decline in trade with the US.

Trade Secretary Sunil Barthwal recently addressed a parliamentary committee, emphasizing that while India values its trade relationship with the US, it will not make compromises that harm national interests.

US Push for More Reductions

On the other hand, the United States has been pushing India to consider broader tariff cuts. US Commerce Secretary Howard Lutnick has encouraged India to take a more extensive approach, especially after the country recently lowered tariffs on high-end motorcycles and bourbon whiskey. The US hopes that India will extend these reductions to other products to improve trade relations further.

The Road Ahead

With negotiations set to continue, India is carefully weighing its options. The government aims to find a balanced solution that protects its industries while maintaining favorable trade ties with the US. If an agreement is reached before the US tariffs take effect, it could help prevent potential disruptions to Indian exports and ensure a more stable economic partnership between the two nations.

At the same time, India remains firm in safeguarding its key industries. The government is focused on ensuring that any trade adjustments align with national economic interests and do not disadvantage Indian businesses. The outcome of these talks will play a crucial role in shaping the future of US-India trade relations.