Sparking concerns across sectors, Trump’s 26% tariff on Indian goods starts today, but experts say India’s resilient economy, especially in electronics, may turn challenges into opportunities.
US President Donald Trump’s 26 per cent tariff on Indian goods officially took effect, starting from 9:30 am on Wednesday. This marked a significant step in his broader trade policy. The tariff is part of a wider plan targeting several nations, addressing what Trump has described as “unfair trade practices.”
According to The Economic Times, Trump had earlier criticised India for imposing high tariffs, citing the country’s 52 per cent duty on US goods. The tariffs have created concerns across various sectors, particularly pharmaceuticals, which saw sharp declines in stock prices.
The tariffs are part of a two-tier strategy. A baseline 10% tariff on all US imports took effect on April 5, triggered by national security concerns linked to the trade deficit. On April 9, higher tariffs were applied to goods from countries like India.
The Indian government has been proactive in assessing potential impacts, holding consultations with industries and reviewing trade imbalances. India has also shown willingness to offer tariff cuts on over 50 per cent of American imports, worth $23 billion, as part of ongoing diplomatic efforts.
Despite these challenges, the economic impact on India is expected to be minimal in the short term. A Bernstein report projects a slight dip followed by a recovery. The PHD Chamber of Commerce and Industry has estimated the tariff will have only a 0.1 per cent short-term impact on India’s GDP. It has emphasised the resilience of India’s manufacturing sector, bolstered by government initiatives like Make in India.
The tariff is expected to affect various sectors differently. For instance, Indian steel, aluminium, and auto components exports now face a 25% tariff. However, critical products like pharmaceuticals and semiconductors remain exempt, which the India Electronics and Semiconductor Association (IESA) welcomed.
Some sectors may even benefit. India’s electronics industry, particularly mobile phone exports, has positioned itself strongly, with lower tariffs than China or Vietnam. Textiles, which form a significant part of India’s exports to the US, could also gain from the new trade dynamics, as US buyers might shift sourcing from other countries to India.
