Tariff wars: Is India next on Donald Trump's list
What's the story
United States President Donald Trump has started a tariff war, placing heavy duties on Canada, China, and Mexico.
The tariffs took effect on February 1, with a 25% tariff on goods from Canada and Mexico and 10% on imports from China.
In retaliation to these measures, Canada announced 25% retaliatory tariffs on American imports worth $20 billion.
Duty reductions
India's proactive measures amidst global tariff tensions
Despite Trump's past tirades against India's tariff structure, New Delhi isn't on his tariff list yet.
During his presidential campaign, Trump had called India a "tariff king" and slammed its high import duties.
Addressing these concerns, India's Union Budget 2025 announced cuts in import duties on products that could benefit American companies such as Harley-Davidson and Tesla.
Luxury tariffs
India's strategic duty cuts on luxury goods
Finance Minister Nirmala Sitharaman also unveiled cuts in customs duties on high-end motorcycles, cars, and smartphone parts.
The duty on motorcycles with engine capacity not exceeding 1600 cc was cut from 50% to 40%, while bigger motorcycles witnessed even steeper cuts.
The tariff rate on luxury cars costing above $40,000 was reduced to 70% from the earlier 125%.
Tariff shift
India's average tariff rate decreases, signaling shift
India's Finance Secretary Tuhin Kanta Pandey stressed that the average tariff rate has fallen to 10.6% from around 11.55%.
"Those rate slabs are gone. It's an indication to both—our industry as well as to the world—that we are not a high tariff nation," he said.
Indian officials are also preparing a response plan in case the US decides to impose tariffs on India in the future.
Tariff readiness
India prepares for potential US tariffs amidst uncertainty
Meanwhile, inter-ministerial discussions are underway in India to brace for possible US tariffs.
"We have to cross the bridge when we come to it. So it will be premature for us to say how the US will impose duties on us or whether it will happen or not," Pandey told Live Mint.
Ajay Srivastava of the Global Trade Research Initiative told Live Mint that recent tariff reductions indicate a shift toward facilitating US exports.