In a dramatic policy change, United States President Donald Trump declared broad new retaliatory tariffs on imports from multiple nations, including India, China, the European Union, Japan, and Israel. The declaration was made during his 'Liberation Day' ceremony in the White House Rose Garden on April 2, 2025.
In his address, Trump announced that the US would charge a 26% tariff on Indian imports. Trump recognized Indian Prime Minister Narendra Modi as a ‘great friend’ but contended that India was not being fair to the US in trade.
"India charges us 52%, so we will charge them half of that, 26%,” Trump said.
The action is set to have a major bearing on US-India trade, with Indian staple exports like pharma drugs, apparel, and information technology services expected to be impacted.
The decision has garnered industry-wide attention with experts chiming in with their opinions, some show relief, while others are concerned about the everlasting impacts.
Ashok Chandak, President of IESA, stated, "The 26% tariff on Indian exports is a major challenge, as the US accounts for 18% of India's total goods exports. This could disrupt trade, squeeze profit margins, and slow global growth. India must act swiftly, leveraging diplomacy and policy shifts to maintain its edge."
"While semiconductors and pharma are spared, sectors like electronics and auto components face risks. The US aims to boost jobs, but inflation, trade disruptions, and recession fears loom. India must balance negotiations and countermeasures to protect its economy while working toward a $500 billion trade expansion."
On the other hand, Dr Ajai Chowdhry, Founder of HCL, and Chairman of EPIC Foundation asked to be aware of how China deals with the new tax levies and its impact on India.
Chowdhry stated, “It's on expected lines. Our IT services and pharmaceutical sectors are fortunate to be exempt from these tariffs. However, globally, the economic impact will undoubtedly be significant. What's interesting is that we're poised to gain an edge over Vietnam and China in the electronics sector and will most likely outperform these countries. But we must be vigilant about China's electronic waste dump and should exercise a high level of concern. We do not, at any point in time, want to turn into a trading colony of China.”
Besides India, Trump revealed tariff increases on other countries as well, including:
| Country | Tariff |
|---|---|
| China | 34% |
| European Union | 20% |
| Japan | 24% |
| Israel | 17% |
Trump cast these actions as part of his wider economic agenda to shield American manufacturers and limit trade deficits.
"My fellow Americans, this is Liberation Day. April 2, 2025, will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to Make America Wealthy Again," Trump said.
The tariffs have already fuelled fears among international economists and US trade partners. Most analysts caution that the action could fuel trade tensions and trigger retaliations from hurt countries. Detractors say the tariffs could raise prices for American consumers and complicate supply chains.
Meanwhile, the government of India said it was exercising caution in weighing the impact of Trump's tariff policy. The action may also impact current trade talks between India and the US.
Trump signed two executive orders making official the new tariff policies after delivering his address. He claimed that his ‘reciprocal’ tariffs were ‘kind’ and could have been much higher.
As the global trade landscape shifts, all eyes will be on how India and other affected nations respond to Trump's latest actions.