A day after US President Donald Trump announced a 90-day 'pause' on reciprocal tariffs against all the countries, except China, the White House announced suspension of the additional duties, including India's 26 percent until July 9 in a big relief for major economies.
The additional tariff on India was part of Trump's "Liberation Day" tariffs, announced on April 2, which were aimed at cutting trade deficit and ramping up domestic manufacturing in America.
This suspension of tariffs is not applicable to China, including Hong Kong and Macau. Trump's announcement leaves China facing a steep 125 percent tariff on top of existing 20 percent levies, and almost all other countries facing a baseline tariff of 10 percent.
"Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on April 10, 2025, enforcement of the second paragraph of section 3(a) of Executive Order 14257 is suspended until 12:01 a.m. eastern daylight time on July 9, 2025," the order said.
The second paragraph of Section 3 (a) of the executive order issued on April 2 mentions the implementation of reciprocal tariffs. It includes Annex 1 listing rate of tariffs for different countries.
However, the 10 per cent baseline tariff imposed on the countries will continue to remain in place.
"Since I (President) signed Executive Order 14257, in contrast to the PRC’s actions, more than 75 other foreign trading partners, including countries enumerated in Annex I to Executive Order 14257, have approached the United States to address the lack of trade reciprocity in our economic relationships and our resulting national and economic security concerns.
"This is a significant step by these countries toward remedying non-reciprocal trade arrangements and aligning sufficiently with the United States on economic and national security matters," the order dated April 9 said.
News agency PTI quoted a trade expert saying that the 25 per cent duty on steel, aluminium (effective from March 12), auto and auto components (from April 3) also continues.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that semiconductors, pharmaceuticals, and certain energy products are under the exemption category.
Commenting on the 90-day deferral of reciprocal tariffs, Indian exporters said the US decision has come as a major relief as it provides a crucial window for pushing the talks on the proposed bilateral trade agreement between India and America.
They said that diplomatic engagement and fast-tracking negotiations for the trade pact will help India deal with these tariffs.
"It is a good decision by the Trump administration. We have been assured by the commerce ministry that the agreement will be finalised at the earliest," FIEO President S C Ralhan said.
Amid a global market meltdown, Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days but raised the tax rate on Chinese imports to 125 per cent.
In a meeting with industry and exporters on April 9, Commerce and Industry Minister Piyush Goyal asked exporters not to panic and assured them that India is working on the "right mix and right balance" in its proposed trade agreement with the US.
He said the Indian team is working with "speed" but not in "undue haste" to ensure the right outcome for the country.
The two countries are negotiating a bilateral trade agreement (BTA) with an aim to more than double their trade to USD 500 billion by 2023 from about USD 191 billion at present. They are aiming to conclude the first phase by the fall (September-October) this year.
The minister assured that the country is working in a proactive manner and exploring solutions which are in the best interest of the nation.
The Indian team working on BTA is exploring the right mix and the right balance and he exhorted the exporters to not panic and look at the silver lining in the present scenario.
In 2023-24, the US was the largest trading partner of India, with USD 119.71 billion bilateral trade in goods (USD 77.51 billion worth of exports, USD 42.19 billion of imports and USD 35.31 billion trade surplus).
China was the second largest trading partner with USD 118.39 billion in two-way commerce (USD 16.65 billion in exports, USD 101.73 billion in imports and USD 85 billion trade deficit).
The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade. On the other hand, China's share is just about 4 per cent in exports and a staggering 15 per cent in imports.
(With PTI inputs)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
