{"id":242241,"date":"2025-02-19T11:38:20","date_gmt":"2025-02-19T11:38:20","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/02\/19\/more-of-white-noise-why-trumps-reciprocal-tariffs-on-indias-exports-to-us-will-have-a-limited-impact-the-times-of-india\/"},"modified":"2025-02-19T11:38:20","modified_gmt":"2025-02-19T11:38:20","slug":"more-of-white-noise-why-trumps-reciprocal-tariffs-on-indias-exports-to-us-will-have-a-limited-impact-the-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/02\/19\/more-of-white-noise-why-trumps-reciprocal-tariffs-on-indias-exports-to-us-will-have-a-limited-impact-the-times-of-india\/","title":{"rendered":"‘More of white noise’: Why Trump\u2019s reciprocal tariffs on India\u2019s exports to US will have a \u2018limited\u2019 impact – The Times of India"},"content":{"rendered":"
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United States remains India’s primary export market, comprising 17.7% of total exports in FY24. (AI image)<\/span><\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\n

US President Donald Trump\u2019s decision to impose reciprocal tariffs on exports from India may have a limited impact, says a recent report. PM Narendra Modi met Donald Trump during his visit to the US last week. The meeting between Modi and Trump took place shortly after the American president declared a fresh reciprocal duty structure to counter elevated tariffs imposed by trading allies.
During the tariff policy announcement, Trump highlighted India’s position as a leading nation in terms of high duty rates. Previously, he had labelled India as a “tariff abuser” and “tariff king”.
So, what will be the impact of US\u2019s reciprocal tariffs on India? Will the damage be extensive on the Indian economy which is already struggling with a slowdown in its GDP growth?
A recent State Bank of India (SBI) report suggests that potential US tariff reciprocity would have limited effects on Indian exports, with an estimated decline of only 3 to 3.5 per cent, even with tariffs ranging from 15 to 20 per cent.
\u201cTariff reciprocity may turn out to be more of white noise\u2026Our estimates show overall incremental tariff levels even at 15%-20% imposed by USA would still limit the impact on exports to US only in the range of 3-3.5%,\u201d said SBI in its report.
The report also said that this impact would be negated through higher export goals, as India has diversified its exports kitty, pitched value addition, exploring alternate areas and works on new routes that transcend from Europe to USA via the Middle-East, redrawing new supply chain algorithms that foster strategic inclusivity.
India-US Trade Picture<\/span><\/p>\n

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  • The United States remains India’s primary export market, comprising 17.7% of total exports in FY24.<\/li>\n
  • Trade surplus with the US has grown substantially from $7 billion in 2000 to $45.7 billion in 2024.<\/li>\n
  • The tariff relationship between both nations has evolved differently, with U.S. rates on Indian goods showing modest fluctuations.<\/li>\n
  • Statistical data shows U.S. tariffs on Indian products increased from 2.72 per cent in 2018 to 3.91 per cent in 2021, before settling at 3.83 per cent in 2022. Conversely, Indian tariffs on U.S. imports showed a steeper rise from 11.59 per cent in 2018 to 15.30 per cent in 2022. (Check Tariff Rate Tables)<\/li>\n<\/ul>\n<\/div>\n


    It’s interesting to note that principal exports are directed at US markets, imports sourced from China<\/span><\/p>\n

    SBI\u2019s analysis suggests that if the US were to announce a 20% uniform tariff on Indian exports, it would potentially reduce India\u2019s GDP by 50 basis points. SBI is quick to note that this scenario is highly improbable.<\/span>
    SBI calculated potential reductions in Indian exports should the US implement a 15% retaliatory tariff (triple the current aggregate) on India. This analysis helps understand how exports respond to tariff changes.
    India’s 2022 tariff rate stands at 3.8% (possibly increasing to approximately 4% during the interim period). SBI\u2019s calculations indicate that an increase to 15% could result in roughly 3% reduction in India’s exports to the US, considering anticipated exchange rate depreciation.<\/p>\n

    India-US $500 billion Trade Plans<\/span>
    India and the United States have agreed to increase their bilateral trade to $500 billion by 2030, whilst developing a framework for a trade agreement aimed at reducing tariffs and enhancing market accessibility.
    Following discussions between PM Modi and Trump, a joint statement outlined their commitment to fostering a trade relationship that ensures equitable growth, safeguards national security and creates employment opportunities.
    “To this end, the leaders set a bold new goal for bilateral trade \u2013 Mission 500 \u2013 aiming to more than double total bilateral trade to USD 500 billion by 2030. Recognizing that this level of ambition would require new, fair-trade terms, the leaders announced plans to negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall of 2025,” it said.
    India\u2019s Export Diversification A Savior?<\/span>
    Whilst the U.S. remains India’s primary export market, India is actively working to reduce its market concentration risk, says the SBI report.
    India is expanding its trade relationships across Europe, the Middle East, and other regions, whilst reinforcing its supply chain infrastructure to maintain export stability.
    In the chart below, it is evident that India\u2019s total export basket shows India has diversified it across years…<\/p>\n

    India’s revised tariff approach demonstrates a calculated trade strategy, balancing international relations whilst safeguarding domestic sectors. The focus has shifted towards value-added exports, moving beyond raw materials to finished products.
    This enhanced value proposition helps maintain competitiveness in global markets whilst potentially offsetting the effects of increased tariffs.
    The report notes India’s development of efficient trade routes connecting Europe, the Middle East, and the US, reducing transport costs and improving operational efficiency. This supply chain enhancement aims to strengthen India’s international trade position.
    Despite potential US tariff increases, India’s strategic trade approach, combined with export diversification and supply chain improvements, suggests continued export growth sustainability, the report says.<\/div>\n