Trump's 26% tariffs on India: Press on PM Modi and New Delhi is ready for the impact?

US President Donald Trump stuck India with some of the highest rate rates imposed on a large American trading partner, saying that his good personal links with Prime Minister Narendra Modi did not affect his decision.

The Trump administration imposed a 26% tariff on imports from India, which is slightly higher than the 20% tax for the European Union, 24% for Japan and 25% for South Korea. China has been struck by one of the highest rates for a large American trading partner and now faces a rate of at least 54% on many goods.

The prices are a setback for the Indian government, which had sought to ward off new samples by deploying radical concessions on central issues of the Trumps Day. During a visit to Washington by Prime Minister Narendra Modi in February, the two nations agreed to work on a commercial pact this year.
Read also: India is faced with 26% “reduced” prices from us; Trump slaps 34% on China

India, very, very difficult. Very, very hard, said Trump during a news event at the White House on Wednesday to announce the prices. The Prime Minister has just left and is a great friend to me. But I said, you are a friend of me, but you don't treat us well. They charge us 52%.

The direct debits should increase the pressure on New Delhi officials to chop a commercial pact with Washington to win a stay, according to a Bloomberg report. Before the move, the Trump administration reported that India would be a target of the new functions, since New Delhi invoices some of the highest tariffs of any great economy. Trump repeatedly criticized India High Levies, marking the country as a pricing king.Read also: What are Trump's new reciprocal rates and how will they have an impact on trade?

Pressure on India

Before the reciprocal announcement, the American rate rates were among the lowest, with simple average prices at 3.3%, against 17% of India, said the White House.

In recent weeks, India has revised its pricing regime, reducing import rights to some 8,500 industrial articles, including on eminent American goods such as Bourbon whiskey and high-end motorcycles produced by Harley-Davidson Inc., satisfactory a long-standing grievance of the American president.

India has also indicated its desire to buy more American oil, LNG and defense equipment to reduce its bilateral trade surplus. Officials also reported that more pricing cuts are in sight.

Read also: Donald Trump confirms 25% of car rates on all cars made abroad

The samples will add additional pressure on India to make even deeper cuts to its tariff diet. As part of the discussions, India is considering American requests for reducing American farm, Bloomberg News reported last week. Managers were optimistic of a favorable result following these concessions.

New rights could also push New Delhi to give in to American demand for dismantling non -tariff trade barriers, such as opaque import restrictions and license requirements on certain imports.

Trump and Modi held several meetings during the first term of the American presidents. The United States on several administrations has cultivated India as a regional partner and replacing against a more assertive China.

Impact on the Indian economy

American tasks have risked bringing India closer to alternative commercial blocks and strategic partners, Nigel Green, CEO of Global Financial Advisory Devere Group, told Reuters.

“(This) makes Indian exports immediately less competitive … It lowers the confidence of investors, just as India is trying to attract world capital that fled China,” he said.

However, a recent SBI research report said that the impact of Trumps prices is likely to be limited. This feeling is taken up by several global research and rating companies and banks such as Goldman Sachs, Nomura, Morgan Stanley and Fitch.

According to the SBI analysis, the potential impact of the reciprocity of the American price on Indian exports would be modest. It projected a reduction of approximately 3 to 3.5%.

The report indicates that the strategic approach of India for the diversification of exports, the emphasis on added value, the exploration of alternative markets and the development of new commercial routes in Europe in the United States in the middle-east would compensate for the effects of American prices.

Goldman Sachs notes that India raw exports to the United States are one of the lowest among its emerging market peers. Fitch says that the low dependence India on external demand makes it somewhat isolated.

Morgan Stanley said that India is exposed to direct risks on prices, we have constantly stressed that the greater effect on tariff growth comes from the indirect transmission channel for the lower confidence of businesses from increased political uncertainty and spills to the CAPEX and the commercial cycle. From this point of view, the orientation of the trade in India's goods and the capacity to generate compensation for domestic demand mean that it is among the least exposed savings in the region from the point of view of the indirect effect.

Despite the impact of Trumps' pricing movements, world economists think that India will continue to be the fastest growth in the world. Depending on the global economic prospects of the IMF, India will become the third world economy in the years to come.

Based on the recent conclusions of Nomura, India is one of Asia's most resilient economies in the current trade conflict.

Ajay Sahai, director general of export organizations of the India Federation, said that the reciprocal rate on India was lower than that of key competitors such as Vietnam and Bangladesh, which could help the Indian clothing and shoe sectors.

Trade n there of India and the United States

Prime Minister Modi, who was one of the first foreign leaders to meet Trump after returning to the Oval Office, recently praised the American president, highlighting their close personal ties. The two nations agreed to conclude the first tranche of a trade agreement by the fall of this year and to increase bilateral trade to $ 500 billion by 2030, against $ 127 billion in 2023, after the meeting.

From 2021-22 to 2023-24, the United States was the largest trading partner in India. The United States represents approximately 18% of total goods from India, 6.22% in imports and 10.73% in bilateral trade.

With India, America has a trade surplus (difference between imports and exports), of $ 35.32 billion in goods in 2023-24. It was 27.7 billion USD in 2022-23, 32.85 billion USD in 2021-2022, 22.73 billion USD in 2020-2021 and 17.26 billion USD in 2019-2020.

Complete list of countries and how many reciprocal rate that Trump imposed: