Overview of the U.S. Tariff Move
- President Trump imposed reciprocal tariffs ranging from 10% to 49% on imports from various trading partners.
- India-specific tariff: A 27% tariff has been levied on Indian exports to the U.S., despite ongoing bilateral trade negotiations.
- The tariffs take effect in two phases:
- 10% baseline tariff on all countries from April 5.
- Higher reciprocal tariffs (like India’s 27%) from April 9.
Relevance : GS 2(International Relations) , GS 3(Economy)
Legal Justification and Intent
- Trump invoked the International Emergency Economic Powers Act (IEEPA), 1977.
- He termed the persistent U.S. trade deficit a “national emergency”.
- Called April 2 “Liberation Day” for U.S. trade.
Impact on Global Markets
- Global shockwaves:
- Japan’s Nikkei: fell 4%
- European markets: fell >2%
- India’s Sensex: down >300 points
- Nifty: also declined
- U.S. Dow Jones: fell 3% in the first hour
- Nasdaq: plunged 4%
India’s Reaction: Muted and Measured
- India’s Commerce Ministry:
- Said it is “examining the implications” of U.S. tariffs.
- Is engaging with stakeholders, exporters, and industry.
- Studying potential opportunities arising from global trade realignments.
- Reaffirmed India’s commitment to a Comprehensive Global Strategic Partnership with the U.S.
- Emphasized the ongoing effort to raise bilateral trade to $500 billion by 2030.
India vs Other Affected Nations
- India’s reaction: Subdued, focused on diplomacy and impact analysis.
- Other countries reacted more strongly:
- EU, China, Canada: Warned of countermeasures.
- Japan, South Korea: Termed the move “regrettable”.
- India appears to be preserving space for negotiations, likely avoiding escalation.
India-U.S. Trade Context
- Trump alleged India imposes up to 52% duties on U.S. goods.
- Despite talks on a Bilateral Trade Agreement (BTA), India still faced tariff imposition.
- India is seeking to deepen trade ties with the U.S., possibly explaining the non-retaliatory stance.
Geopolitical and Economic Implications
- The tariff war could reshape global trade alignments.
- Possibility of India capitalizing on shifting supply chains.
- May provide India an opening in markets vacated by retaliatory actions against the U.S.
