India is a major trading partner of the US. Last year, trade between the two countries was around $130 billion. In such a situation, Trump's announcement is a setback for bilateral trade. The US Chamber of Commerce feared that the new tariffs would damage business confidence and could lead to a reduction of $15 to $20 billion in trade in 2025-26. The US has already imposed a 50 percent duty on steel and aluminum and a 25 percent duty on the auto sector.
Trump's tariffs will have the most impact on these sectors.
The sectors of India that will be most affected include gems and jewellery, the pharmaceutical industry, automobiles and spare parts, electronics, and the textile industry. America is a big market for these sectors.
No impact on these
IT services, FMCG, telecom, real estate, banking, and power sectors will not be affected much.
Relief to IT companies too
The share of these sectors in trade with America is very low. Indian IT companies do business in America, but it comes under the service category, which is outside the tariff.
Tariffs are higher than those of Asian countries.
Trump had announced a 26 percent tariff on India on April 2, which was later put on hold for 90 days. Now the 25 percent tariff is higher than in other Asian countries except China. Trump has imposed a 20 percent or less tariff on Indonesia, the Philippines, Vietnam, and Japan. Amidst the tariff conflict between America and China, some big American companies, including Apple, had started shifting their production to India. If this tariff remains, India will suffer.
Trump's changed tone
Meanwhile, just a few hours after the announcement of imposing a 25 percent duty on all products imported from India from August 1, the tone of US President Donald Trump seems to have changed. On a question asked by the news agency ANI, whether he is ready to negotiate with India on tariffs? Trump said, 'We are talking to them right now. We will see what happens. India was the country imposing the highest or almost the highest tariff in the world. We will see. We are currently in talks with India.
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