In a major
protectionist push, the United States has rolled out a sweeping “reciprocal
tariff regime” from August 7, 2025,
raising duties to their highest levels in decades. Average tariffs now stand at
around 18–19%, with certain goods —
including semiconductors, steel, aluminium, and consumer products — facing
rates as high as 100%. India has
been specifically hit with an additional
25% levy on a wide range of exports.
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The U.S.
government argues the move levels the playing field by matching the import
duties other countries impose on American goods. However, critics warn of
inflationary pressures, disrupted supply chains, and strained trade relations.
In the U.S., the policy is already pushing up consumer prices for electronics,
clothing, food, and alcohol, while trimming the trade deficit by reducing
imports.
For India,
the implications are significant. The U.S. is its largest export market, with shipments worth over $100 billion
annually. Higher tariffs threaten to erode the competitiveness of Indian steel,
textiles, jewellery, and engineering goods, potentially hurting employment and
foreign exchange earnings. The move may also push India to diversify exports
toward ASEAN, Africa, and the Middle East.
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India’s Response
The Ministry of Commerce has called the
measure “unilateral and against the
spirit of fair trade”. New Delhi is considering raising the issue at the World Trade Organization for violating
trade norms and discriminatory targeting. Through diplomatic channels, India
has sought urgent consultations with Washington, even as the U.S. has rejected
certain WTO-based talks citing national security.
Meanwhile,
India has signalled readiness to impose retaliatory
tariffs on select U.S. goods, including automobiles and agricultural
products, if negotiations fail. Formal proposals for countermeasures — worth
billions in trade value — have already been tabled at the WTO.
With both
nations holding firm, the coming months will test whether strategic partnership
can outweigh escalating trade disputes.
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