{"id":2907,"date":"2025-02-19T18:33:58","date_gmt":"2025-02-19T13:03:58","guid":{"rendered":"https:\/\/www.torusdigital.com\/toruscope\/?p=2907"},"modified":"2025-11-19T15:11:10","modified_gmt":"2025-11-19T09:41:10","slug":"trump-reciprocal-tariff","status":"publish","type":"post","link":"https:\/\/www.torusdigital.com\/toruscope\/news\/trump-reciprocal-tariff\/","title":{"rendered":"What is Trump\u2019s Reciprocal Tariff? Is it a Threat to India?"},"content":{"rendered":"

[vc_section el_id=”blog-inner-layout”][vc_row overlay_dotted=””][vc_column el_class=”blog_primary”][vc_row_inner][vc_column_inner][vc_column_text css=””]US President Donald Trump on 13 February imposed the \u2018<\/span>reciprocal tariffs<\/b>‘ on US trading partners, citing the need to correct trade imbalances. He emphasised that during his first term, he raised concerns about high import <\/span>tariffs <\/b>but could not secure any concessions.<\/span><\/p>\n

Trump also pointed out that while the US advocates free trade, its trading partners frequently obstruct American exports. According to him, the introduction of <\/span>reciprocal tariffs<\/b> will correct this imbalance and ensure fairer trade practices.<\/span><\/p>\n

Continue reading this article to have a comprehensive understanding of what reciprocal tariff is, the goal of the imposition, and its effect on India.\u00a0<\/span><\/p>\n

<\/span>What is a Reciprocal Tariff?<\/b><\/span><\/h2>\n

A normal <\/span>tariff<\/b> is a tax that governments of a particular country impose on imported goods from another country. Whereas, the reciprocal tariff would essentially mirror the tariffs imposed by other countries on US products, applying the same rate to their goods entering the US, thereby levelling the playing field.<\/span><\/p>\n

The US intends to apply these <\/span>tariffs<\/b> universally, regardless of whether the country is a strategic competitor like China or a close ally.<\/span><\/p>\n

These <\/span>reciprocal tariffs<\/b> would involve rate hikes on imports, designed to match the <\/span>tariffs <\/b>other countries impose on US exports. Experts predict that this could increase the average US <\/span>tariff<\/b> rate by approximately 2 percentage points.\u00a0<\/span><\/p>\n

<\/span>What is the Goal of Reciprocal Tariff?<\/b><\/span><\/h2>\n

One of the primary goals behind introducing <\/span>reciprocal tariffs<\/b> is to establish parity with other countries on their tariff rates. This means that whatever other countries charge from the US, the US will charge the same from them.<\/span><\/p>\n

Trump emphasised that the initiative serves both geopolitical and economic interests all over the world, particularly concerning trade relations with markets like India and the European Union (EU). The EU will also face some risks due to this tariff. The EU imposes an average tariff rate of 5%, which is high compared to the US’ 2.5% rate on European vehicles.<\/span><\/p>\n

This plan will also involve current geopolitical priorities with Ukraine. It may find a resolution for the situation in Ukraine. It will also increase US exports to key sectors of Ukraine such as Liquefied Natural Gas (LNG).<\/span><\/p>\n

In addition to <\/span>reciprocal<\/b> tariffs<\/b>, Trump reiterated his intention to impose import taxes on specific products such as cars, pharmaceuticals, and semiconductors\u2014\u201cover and above\u201d the <\/span>tariffs<\/b> on other goods. This directive from Trump instructed the US Commerce Secretary and the US Trade Representative to review these trade issues and recommend appropriate measures.<\/span><\/p>\n

The expected enforcement of these tariffs will be in April 2025. The <\/span>tariffs<\/b> could be imposed under national security concerns, emergency economic powers, and due to unfair trade practices.<\/span><\/p>\n

<\/span>What are the Complications of Reciprocal Tariffs?<\/b><\/span><\/h2>\n

Experts remain uncertain whether President Donald Trump views <\/span>reciprocal tariffs<\/b> as a replacement for the universal 10% to 20% tariff he proposed during his campaign. Goldman Sachs has cautioned that using “<\/span>reciprocal tariffs”<\/b> to address non-tariff issues could be risky. Additionally, Trump might factor in value-added taxes (VATs) when determining <\/span>tariff <\/b>adjustments, adding further complexity to the policy.<\/span><\/p>\n

<\/span>Will Reciprocal Tariffs Impact India?<\/b><\/span><\/h2>\n

Trump\u2019s decision could have significant consequences for India, as he has repeatedly criticised India\u2019s high tariffs. He stated, \u201cIndia has more <\/span>tariffs<\/b> than nearly any other country.\u201d He also mentioned his failure to secure concessions on <\/span>tariff<\/b> reductions with India during his first term, which has now paved the way for a reciprocal approach.<\/span><\/p>\n

Applying average tariff rates across all products could substantially impact India, given its historically higher import taxes as compared to the US. If the US aims to reduce the trade gap, India could face tariff hikes of 4 to 6 percentage points.<\/span><\/p>\n

The implementation of <\/span>reciprocal tariffs <\/b>would highlight India\u2019s high tariff rates. For example, India currently imposes an 8.5%<\/span> tariff <\/b>on US imports, but some segments face significantly higher rates. The motorcycle sector, for instance, levies a 30% tariff on US imports. Under the new policy, the US would mirror these rates, potentially increasing costs for Indian exports.<\/span><\/p>\n

Uncertainty surrounding trade policies can undermine business confidence and slow economic growth. Increased risk aversion may deter investors from the stock market<\/a>, further destabilising financial markets.\u00a0<\/span><\/p>\n

Several key Indian industries could come under pressure due to reciprocal tariff hikes, including:<\/span><\/p>\n