India-America Relations / Trump's stubbornness will shatter all the hopes of India, this much loss can happen

India-America Relations: US President Donald Trump's threat to impose reciprocal tariffs has raised concerns in Indian exporting sectors. These tariffs, proposed from early April, could affect automobiles, agriculture and other key sectors. Analysts at Citi Research estimate that this could lead to potential losses of about $7 billion (about Rs 61 thousand crores) annually for India.

Potential threats to India

According to Citi analysts, the chemical, metal products and jewelry industries are likely to suffer the most. Apart from this, automobiles, pharmaceuticals and food products may also be affected by this tariff increase. India's total exports to the US in 2024 were around $74 billion, including gems and jewelry worth $8.5 billion, pharmaceuticals worth $8 billion and petrochemicals worth about $4 billion.

What does the US export to India?

The value of manufacturing exports from the US to India was around $42 billion in 2024. These include tariffs ranging from 7% on wood products and machinery to 15-20% on footwear and transport components and about 68% on food products.

Impact on agriculture sector

If the US imposes reciprocal tariffs on agricultural products, Indian agricultural exports could be hit hard. Currently, the US's average MFN tariff is 5%, while India's is 39%.

Status of textile, leather and wood industries

These industries will be comparatively less affected as US companies in these sectors have production units in South Asia. They may also get some relief from India's free trade agreements.

Possible impact in worst-case scenario

If the US increases tariffs by 10% on all goods and services imported from India, the Indian economy could suffer a shock of up to 50-60 basis points, leading to a decline of 11-12% in India's exports.

India's strategy

To ease this trade tension, India has already cut some tariffs, such as tariffs on high-end motorcycles from 50% to 30% and on bourbon whiskey from 150% to 100%. Apart from this, India has also assured to review other tariffs, increase energy imports and buy more defense equipment.

Conclusion

The impact of Trump's reciprocal tariffs could be severe for Indian exporters. However, India is trying to deal with this situation by changing its trade policies. It will be important to see how this trade relationship moves in the coming months.