US President Donald Trump said he would be imposing tariffs on automobiles, semiconductors, and pharmaceutical imports of around 25%, applicable from April. This would be a significant move that represents a dramatic widening of the president’s trade war.
Earlier, Trump announced 25% tariffs on steel and aluminum from March. The new levies on automobiles will come with significant effects. Almost 8 million passenger cars and light trucks were brought into the US last year, which is around half of US vehicle sales. European brands, including Volkswagen AG and Asian companies like Hyundai Moto Co. would be among the most affected.
There is no clarity on whether the measures would target specific nations or apply to all vehicles imported to the US. It is still not clear whether cars manufactured under a free trade agreement with Canada and Mexico would be spared from industry-specific duties, should they take effect.
Donald Trump’s threat to impose reciprocal tariffs is creating anxiety in the Indian export sector, from the agriculture sector to the automobile. Experts believe that it would cause a potential loss of around $7 billion a year.
Government employees are still waiting for more details on how the tariffs will be calculated. Although they are preparing a proposal for trade details with the US to reduce tariffs and improve the two-way trade.
With this new decision, chemical, metal products, jewelry, automobiles, food products, and pharmaceuticals are the major sectors at risk.
India’s merchandise exports to the US were around $74 billion last year, including gems, pearls, and jewelry worth $8.5 billion, petrochemicals worth $4 billion, and jewelry worth $8.5 billion.
At an aggregate level, India charged a weighted average tariff of around 11% in the year 2023. It is 8.2 percent points more than the U.S. tariffs on Indian exports.
To ease these trade tensions, India has reduced the tariffs on some items, including cutting tariffs on high-end motorcycles from 50% to 30% and on Bourbon whiskey from 150% to 100%. Further, the country has promised to review other tariffs, focus on energy and imports, and buy more defense equipment the the US.