The article first appeared in Business Standard on Mar 10, 2025.
The United States has announced that it will impose new tariffs on Indian imports starting April 2, a decision that could significantly affect trade between the two nations. This policy, introduced by President Donald Trump, aims to counter India’s existing tariffs on US exports. By implementing equivalent duties on Indian goods, the US seeks to address the long-standing trade imbalance between the two countries.
One of the key factors contributing to the trade imbalance is India’s high tariffs on certain US goods, particularly automobiles, chemicals, and electronics. India imposes more than 100% tariffs on US vehicles, making it challenging for American automobile manufacturers to compete in the Indian market. With the new policy, the US will now impose similar tariffs on Indian auto imports, which could disrupt the $129.2 billion bilateral trade relationship. These changes are expected to impact Indian exporters, who rely heavily on access to the US market.
India-US Trade in 2024
In 2024, the United States remained India’s largest trading partner, with total goods trade amounting to $129.2 billion. According to the Observatory for Economic Complexity (OEC):
- US exports to India reached $41.8 billion, marking a 3.4% increase from 2023.
- US imports from India totaled $87.4 billion, reflecting a 4.5% rise.
- The trade deficit stood at $45.7 billion, highlighting the trade imbalance that Washington aims to reduce through these new tariffs.
India’s top exports to the US included packaged medicines ($10.4 billion), diamonds ($7.61 billion), broadcasting equipment ($6.18 billion), and petroleum products ($522 million as of November 2024). Meanwhile, major US exports to India consisted of crude petroleum ($5.5 billion), coal briquettes ($4.61 billion), and gas turbines ($2.39 billion).
With 17.7% of India’s total exports going to the US, the newly imposed tariffs could significantly impact crucial industries. While the US aims to address its trade imbalance, both countries will need to engage in further negotiations to prevent disruptions and ensure a stable trade partnership in the future.
Read more at Business Standard
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