India Considers Response to President Trump's New Tariff Plan, Claims 26% Tariff Imposition Not a "Setback"

India Considers Response to President Trump's New Tariff Plan, Claims 26% Tariff Imposition Not a "Setback"

India's response to President Donald Trump's new tariff plan is being carefully considered by Indian officials, who have firmly stated that while it is serious, it is not a "setback" for India.

Trump, in his usual humorous style, claimed that India has imposed a 52% tariff on American goods, stating, "India is very, very tough. Very, very tough. The prime minister has now gone, he was my great friend, but I said, ‘You’re my friend, but you’re not treating us right.’” He further added that for decades, the United States had imposed very little tariff on Indian products, but American goods had faced harsh tariffs in India.

Meanwhile, Indian trade ministry officials have said that the impact of the proposed tariffs is still under review and discussions are ongoing. "It’s a mixed impact and it’s not a setback for India," the Times of India quoted the official as saying. They also mentioned that talks are underway to finalize the first phase of the bilateral trade agreement with the U.S., and it is expected to be completed by September or October.

The Numbers Game

While Trump's announcement has stirred political tension, trade analysts argue that the 52% tariff figure claimed by Trump is far from reality. The average tariff on Indian imports is 7.7%, while the tariff on U.S. imports is 2.8%. The tariff difference is 4.9%, which is significantly lower than the 52% claimed by Trump. It is believed that Trump’s 52% tariff figure includes other trade barriers and top-tier tariffs in addition to the actual tariff rate, which is not the real tariff rate, as mentioned in a report by JM Financial.

If the 26% tariff comes into effect, the most affected sectors could be telecom equipment (which accounts for 20% of India’s exports to the U.S.), pharmaceutical formulations (10%), jewelry (16%), and apparel (10%), which are high-value sectors and make up more than half of India’s $77 billion in exports.