Officials confirm that broader US tariffs, including those on metals or specific country blocs, are currently not on the table in ongoing trade discussions between India and the United States.
Focus on Current Trade Negotiations
India and the US are focused on specific trade issues based on terms agreed upon in April. A key demand from Indian negotiators is relief from US reciprocal tariffs, in exchange for opening up the Indian market to American goods.
The goal remains to finalize a bilateral trade agreement (BTA) by the end of the year. This indicates a focused approach to existing disputes rather than expanding into new, wider tariff discussions.
Existing US Tariffs and Their Impact
Currently, the US has baseline tariffs of 10% in effect, alongside sectoral tariffs on steel and aluminum. These measures have already led to increased duty collections for the US and a reduction in imports from certain countries, particularly China, in specific sectors.
These existing tariffs, though not part of the current negotiation scope, still significantly impact global trade flows, including those involving India.
Trump’s Broader Tariff Strategy
Former US President Donald Trump has consistently advocated for and implemented new tariffs, even against countries with established trade deals like Canada and Mexico. This stance signals a continued willingness to use tariffs as a trade tool, creating uncertainty for global exporters.
His past threats include steep tariffs on BRICS countries, citing their challenge to the US dollar, and duties on nations that purchase Russian oil. India is a significant importer of Russian oil, making this a potential point of concern if such tariffs were to be introduced or expanded.
Potential Threats to Indian Exports
Indian exports are already experiencing disruptions from existing sectoral tariffs. For instance, a 50% tariff on steel, aluminum, and copper has impacted India’s shipments to the US. While the US is India’s third-largest copper export market, domestic demand might absorb some of the decline in US orders.
However, the impact on steel exports has been more direct and significant, according to exporters.
New Tariff Threats on Pharmaceuticals
Adding to these concerns, Trump has recently threatened substantial tariffs on imported semiconductors and pharmaceuticals. He stated that medicine tariffs could soar to 200% after about a year, giving drugmakers time to adjust.
This is particularly critical for India, as the US is its largest overseas market for pharmaceuticals. In the last fiscal year, drug exports to the US surged to $9.8 billion, representing 40% of India’s total pharma exports. Such a tariff would have a profound impact on a vital Indian industry.
- Wider US tariffs are not currently part of India-US trade talks.
- Negotiations focus on reciprocal tariffs and a bilateral trade agreement by year-end.
- Existing US tariffs on steel and aluminum are already affecting global trade.
- New potential tariffs on BRICS nations, Russian oil buyers, and pharmaceuticals pose future risks for India.
- The US is a crucial market for Indian pharmaceuticals, making proposed tariffs a major concern.
As negotiations continue, the focus remains on navigating existing trade barriers while keeping a watchful eye on potential new tariffs that could reshape global commerce.
