New DelhiA few moments agoAuthor: Aditya Mishra
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After assuming office on January 20, Trump issued an executive order related to the tariff.
The US is going to put a recipe on the lines of ‘Eye Staller Eyes’ from April 2. This means that America will put as much tariffs on the goods coming from American companies on the goods going to America of Indian companies.
This announcement was made by US President Donald Trump in the joint session of the US Parliament on 5 March in the morning according to Indian time. He gave a record 1 hour 44 minute speech.
What will be the impact on India with this decision? Why are the Presidents of America doing this? There are many questions that we will know in this story …
1. What is tariff?
Tariff is a tax imposed on goods coming from another country. Companies that bring foreign goods to the country pay this tax to the government. Understand this with an example …
- Tesla’s cyber truck is sold in the US market for about 90 lakh rupees.
- If the tariff is 100%, then it will cost around 2 crores in India.
2. What is the meaning of reciperochl tariff?
Reciperookl means to equalize both the scales of the scales. That is, there is 1 kg of weight on one side, and on the other side also keep one kilo of weight and make it equal. Trump is talking about increasing it. That is, if India imposes 100% tariff on some selected items, then America will also impose 100% tariff on that kind of products.
3. Why are Trump doing this?
Tariff is a part of Donald Trump’s economic plans. He says that tariffs will boost American manufacturing and increase employment. With this, tax revenue will increase and economy will increase.
In 2024, more than 40% of the imports in the US were of goods from China, Mexico and Canada. America is incurring business losses due to low tariffs.
In 2023, the US suffered 30.2% from China, 19% from Mexico and 14.5% from Canada. Overall, these three countries are responsible for the US dollars of $ 670 billion, or about 40 lakh crore rupees in 2023.
The Trump government wants to reduce this deficit. so, Since 4 March 2025, 25% tariffs have been implemented on Mexico and Canada. Additional 10% tariffs have also been implemented on China. From April 2, India is also going to have reciperook tariffs.
Understand how the US is losing from low tariffs with an example. India has 100% tariffs on US made motorcycles including Harley-Davidson, but there is much less tariff on vehicles to be exported from India to America.
This causes 2 disadvantages to America …
- First- The company will never be able to increase its business in India due to the vehicle being expensive.
- Second- Low export increases trade. That is, the economy will grow at a slow pace.
4. What will be the effect on India?
- Export can be expensive: Reciperochl tariff can make food products, textiles, clothing, electrical machinery, gems and jewelery, pharmaceuticals and automobiles- Indian exports can be expensive. Due to this, these stuff will not be able to compete there.
- Trade Sarpalus will decrease: Right now the US imposes less tariffs on India’s goods, which gives India the benefit of trade surplus. Increased tariffs may reduce the benefit of India from trade Serpelus.
- Import may increase: If India reduces tariffs on American goods to avoid more tariffs of America, American things will become cheaper in the Indian market. This can increase the import of these goods.
- Rupee can be weak: More import means more demand of dollars. This will weaken the rupee and increase India’s import bill. This means now you have to pay more money to buy goods from America.
- Foreign investment will increase: If India does not reduce tariffs, then American companies can emphasize their production in India to avoid high tariffs, this will increase the foreign direct investment i.e. FDI.
- Loss of $ 7 billion: Tariff has increased concern in India’s auto to agriculture. Business analyst believes that India may lose about 7 billion dollars (61 thousand crores) every year by increasing Trump’s tariff.
5. Which sector of India will be the most affected?
In 2024, the US sold goods worth about $ 42 billion (about 3.6 lakh crore rupees) to India in 2024. In this, the Government of India has charged 7% on wood products and machinery, 15% to 20% on footwear and transport equipment and about 68% on food products.
America’s tariff on agricultural products is 5% compared to India’s 39%. If the US decides to impose reciperook tariffs on agricultural products, then India’s agriculture and food exports will have the most impact. The tariff difference here is the most but trade volume is low.
6. Why is the announcement of increasing the tariff from April 2?
Trump was going to announce the increase in tariff from April 1, 2025, but due to April flower on this day, people would consider it a joke. So he decided to increase the tariff from April 2. Trump said that he is very serious about the tariff and does not want to let it joke.
