All eyes on government reaction to Trump tariff announcement

U.S. President Donald Trump.
| Photo Credit: AP

Ahead of an expected announcement on “reciprocal tariffs” by United States President Donald Trump, the government braced for harsh tariffs against India. However, it also hoped for some relief or leniency down the road due to the concessions on import duties that Indian trade negotiators have proposed to the U.S. Trade Representative over the past few weeks.

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Mr. Trump’s first social media message of the day previewed his plans — which have kept global markets, including Indian indices, on tenterhooks for the past few weeks — with a short message. “It’s liberation day in America!” Mr. Trump wrote on the Truth Social platform, using the term he has used for the implementation of tariffs against several countries that he claims have treated the U.S. “unfairly” by imposing higher import duties than they receive from the U.S.

‘Waiting game’

All eyes will be on how the markets will respond when they open on Thursday, and whether India will join other countries that have already warned of or implemented counter-tariffs against the U.S., or not. “It is a waiting game now,” said an official, declining to comment on what the Modi government’s reaction might be.

India has been identified as the country with the “highest average Most-Favored-Nation (MFN) applied tariff rate” (17%) of any major world economy by the USTR’s report on Foreign Trade Barriers released this week. It is also one of U.S. Treasury Secretary Scott Bessent’s “Dirty 15” countries with the highest bilateral trade deficit ($45.7 billion) in their favour.  In addition, the USTR has singled out Indian surcharges, market access in many areas, and mandatory price caps on items like medical equipment for penalties.

Also read | Trump’s tariffs: India’s agri, machinery, pharma, electrical, chemical sectors may see impact: Experts

However, Mr. Trump’s statement that India was now prepared to bring tariffs “way down” was seen as an acknowledgement that Commerce Minister Piyush Goyal and Indian trade negotiators had made some dent in the country’s image. Sources said that after a visit by Mr. Goyal to Washington, and talks from March 25 to March 29 between the USTR and Commerce Ministry officials in Delhi, India has agreed to discuss reducing or zeroing out tariffs on more than half the U.S. goods being imported, and are discussing market access for the previously ‘no-go’ sectors of agriculture and dairy.