US Implements Sweeping 27% Tariff on Indian Imports, Signaling Aggressive Trade Policy Shift in 2025
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US Implements Sweeping 27% Tariff on Indian Imports, Signaling Aggressive Trade Policy Shift in 2025
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The US has rolled out sweeping tariff reforms under the Trump administration, significantly impacting global trade partners, including India. On April 2, 2025, termed “Liberation Day” by the administration, President Trump announced a phased tariff plan to address trade imbalances. A baseline 10% tariff on all imports took effect April 5, followed by country-specific rates starting April 9. For India, the rate escalated to 27%, according to an EY analysis. However, earlier reports referenced a 26% rate, reflecting potential nuances in product categories.
India faces heightened challenges due to its trade dynamics with the US. The White House cited India’s average Most Favored Nation tariff of 17%—the highest among major economies—with agricultural goods taxed at 39%. The US Trade Representative’s March 2025 report criticized India’s non-tariff barriers on goods like automobiles, alcoholic beverages, and agricultural products.
Recent escalations include a 25% global tariff on steel, aluminum, and automobiles, effective March 12 and April 3, respectively. A May 2 update targets Chinese goods shipped through postal networks with duties up to $150 per item, though India-specific adjustments remain focused on the April 9 framework. The administration claims these measures aim to rebalance trade deficits and protect domestic industries.
India’s competitive position varies: its 27% tariff is lower than China’s 34% and Vietnam’s 46%, but higher than Canada and Mexico’s 25%—though USMCA exemptions for those countries complicate comparisons. The phased approach allows exemptions for US-originating content, requiring at least 20% domestic value.
Retaliatory measures from trade partners, including India, remain under watch. While the US asserts these tariffs address decades of “non-reciprocal treatment,” global markets brace for ripple effects.
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